Most US retail chains suffered through a dismal, record-warm October, with leader Wal-Mart Stores Inc falling short of Wall Street same-store sales estimates and the apparel sector continuing to struggle.
Experts said the weak October sales, coming as consumers grapple with higher food and gasoline prices in an economy shaken by the US housing meltdown, likely did not bode well for the holiday shopping season.
Consultants TNS Retail Forward said an October poll indicates more shoppers are planning to spend less for Christmas than last year, especially lower-income buyers who face job worries.
"We're just seeing a reflection of all the factors out there that are affecting consumers," said Britt Beemer, chairman of America's Research Group, which also studies consumer behaviour. "This softness in October will translate into continued softness this month and the next month."
According to research firm Retail Metrics, 70 per cent of retailers missed sales expectations for last month as department stores and most specialty apparel sagged. Warehouse clubs fared best, helped by higher fuel prices, which encourage people to buy more on single shopping trips.
The International Council of Shopping Centres said the month's same-store sales performance - an overall rise of 1.6 per cent year-over-year - represented the slowest October growth since 1995.
Wal-Mart reported a lower-than-expected 0.4 per cent rise in monthly same-store sales at US stores. The company, which has aggressively cut prices on toys and other goods, forecast that this month same-store sales would be flat to up 2 per cent.
Wal-Mart's "core shopper, a lower-income shopper, is hurting a bit more this year," said Frank Badillo, an economist with TNS Retail Forward. "There's been more job-cutting among blue-collar workers."
Rival discounter Target Corp said same-store sales rose 4.1 per cent in the month, better than the 2.5 per cent analysts expected, as more shoppers arrived late in the month.
Warehouse clubs Costco Wholesale Corp and BJ's Wholesale Club Inc also reported better-than-expected sales, benefiting from fuel price increases.
"I think people are consolidating trips with gasoline so high," said Sarah Henry, an analyst with MFC Global Investment Management.
Apparel chains continued to suffer as warmer temperatures hurt sales of sweaters and coats. Temperatures in the eastern two-thirds of the United States averaged five to eight degrees warmer than usual, and cities such as New York recorded their hottest October ever, according to weather tracker Planalytics Inc.
Limited Brands Inc disappointed with a six per cent same-store sales drop against the 1.8 per cent fall analysts had expected. Gap Inc. had an eight per cent same-store sales drop, and Chico's FAS Inc. posted a 10.6 per cent sales slide and said profit would slump in the current quarter.
Mr Beemer, from America's Research Group, said unappealing styles in women's clothing and decreased mall traffic have hurt many apparel retailers.
The luxury segment did well, however, as Saks Inc. posted a better-than-expected 10.6 per cent sales rise and Neiman Marcus reported an 8.5 per cent increase in same-store sales revenue.
Teen clothing also showed strength as Aeropostale noted that the early reaction to holiday goods was positive.
But high-end retailer Nordstrom Inc. had a 2.4 per cent decline in same-store sales, compared with the 1.1 per cent rise analysts had expected, as business was hurt by Southern California wildfires.
"Our consumers are clearly facing headwinds that are impacting both sentiment and discretionary spending levels," J.C. Penney Co Inc. Chairman Myron Ullman said in a statement.
High energy costs and the soft housing market will lead to good holiday bargains, said Faith Hope Consolo, retail leasing and sales chairman at Prudential Elliman Retail Leasing. Some chains have begun mailing sales certificates to customers while malls plan breakfasts with Santa to spur traffic, she added.
"I think the retailers are going to be very price sensitive," Mr Consolo said.