Heavy discounts help make for gains in October

New York City Many retailers reported solid gains in October as heavy discounting on cold-weather items prompted shoppers to spend amid unusually warm temperatures in much of the country. There were a few weak spots, however, with weak sales of seasonal merchandise at some retail chains. Overall, Thomson Reuters, which tracks same-store sales for a group of 28 national chains, said total sales for the group were expected to post a 1.6% increase in same-store sales for October.

Costco Wholesale Corp. and Limited Brands were among the chains that reported larger increases than Wall Street analysts expected. Macy's also had a good performance, outshining J.C. Penney Co. and Kohl's Corp., both of which suffered sales declines. Macy's also raised its earnings outlook. Target Corp. had a small gain that inched above Wall Street estimates.

October is typically a slow month because it falls between back-to-school shopping and the start of the holiday shopping period. But shoppers appeared to take more of a breather than usual as they grappled with continued economic uncertainty.

"It was a promotionally driven month," said Jharonne Martis, director of consumer research at Thomson Reuters, in an Associated Press report. "Warm weather hurt sales of fall merchandise. We expect discounting is going to be necessary to drive holiday sales."

In the apparel segment, Zumiez said its same-store sales rose 21.5% in October, far above the 7.8% analyst estimate reported by Thomson Reuters.

Limited Brands turned in another strong performance, with a 9% increase in same-store sales.

Both Limited and Zumiez raised their third-quarter earnings forecasts.

Abercrombie & Fitch Co. said its sales rose 2% in October, below estimates, but quarterly revenue came in above analyst expectations.

For the quarter, revenue at stores open at least a year rose 7%, while net revenue rose 18% to $885.8 million. In related news, Abercrombie said starting in fiscal 2011, it will no longer report its monthly sales figures. Instead it will report its quarterly sales results on the first Thursday after the close of each quarter.

Among the retailers that did worse than expected in October was Hot Topic, whose same-store sales fell 8.5%. The figure fell 10.7% at namesake stores, but rose 2.9% at its plus-sized Torrid division.

In other apparel same-store results for October:

  • The Buckle outdid estimates, with a 2.6% increase.
  • Gap’s sales increased 2%.
  • Cato reported a 2% increase.
  • The Wet Seal reported a 1.3% decline in sales.
  • Aeropostale’s sales decreased 2%
  • American Eagle Outfitters reported a 2% decrease. The company noted it completed the closure of its Martin + Osa stores during second quarter 2010.
  • Destination Maternity reported a 0.6% increase.