US chain stores slashed prices to drum up demand in September as Hurricanes Katrina and Rita drove up gasoline prices and pinched consumer spending, putting pressure on profits, retailers reported yesterday.

Chains that sell gasoline, including Wal-Mart Stores Inc. and Costco Wholesale Corp., led the way with better-than-expected sales growth. But several apparel retailers and department stores missed forecasts, and some trimmed profit forecasts as heavy markdowns eroded margins.

Wal-Mart kept its profit forecast for the current fiscal third quarter, but said the hurricanes cut one cent per share from earnings in the period.

Wal-Mart, the world's biggest retailer, said its September sales at stores open at least a year - a key retail measure known as same-store sales - rose 3.8 per cent, toward the high end of its forecast.

But the results were flattered by sales of gasoline at its Sam's Club warehouse stores, and the retailer was quick to point out that sales would have been up a more modest 3.2 per cent without gasoline sales. Costco also said steep oil prices boosted September same-store sales, which were up 11 per cent from a year earlier. Analysts had expected only a 6.7 per cent increase, according to estimates compiled by Reuters. Costco said US same-store sales jumped 10 per cent, but the gain would have been just eight per cent if not for a steep 47 per cent year-over-year jump in gasoline prices.

Overall, analysts are looking for a 3.6 per cent gain in September same-store sales, up from last year's 2.3 per cent increase, according to research firm Retail Metrics. Federated Department Stores Inc. reported a 1.3 per cent September same-store sales increase, below its expectations for a two per cent to three per cent increase.

The retailer blamed lost sales from stores closed due to the hurricanes, as well as reduced spending because of higher gas prices and weakening consumer confidence.