Retailers report modest gains in October

NEW YORK -- After several months of robust spending, consumers took a break in October, giving retailers only a modest uptick in business. Warm weather curtailed sales at clothing retailers, but some analysts said the industry's overall improved sales trend was still in place.

As the nation's largest merchants reported their results last week, it was clear that discounters and wholesale clubs fared the best, benefiting from strong sales of Halloween candy and costumes.

Department stores and mall-based apparel stores struggled, unable to sell consumers cold weather wear amid above-average temperatures in the Northeast and Midwest.

Wal-Mart Stores Inc., the world's largest retailer, and Costco Wholesale Corp. had results that were above Wall Street estimates. Meanwhile, Kohl's Corp. was one of the biggest disappointments, posting sales declines much deeper than Wall Street expected.

The result still "fits the improving landscape," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. He said merchants are poised for a solid holiday season.

The company's preliminary tally of sales from 68 retailers was up 3.2 percent, better than the reduced 2.5 percent gain Niemira expected. That compared with a 3.2 percent sales increase in the year-ago period.

Kurt Barnard, president of Retail Forecasting LLC in Upper Montclair, N.J., was more cautious about sales trends.

"It is not just the weather. This is the beginning of the dwindling effect of the tax rebates," which has helped to spur consumer spending, he said.

Meanwhile, a pair of reports from the Labor Department provided further evidence of an economic rebound. Productivity of U.S. companies in the third quarter posted the best showing since early 2002 and new claims for unemployment benefits last week fell to the lowest level in more than two years.

Wal-Mart reported that same-store sales were up 4.5 percent, slightly above Wall Street estimates of a 4.2 percent gain. The company's total sales were up 11.8 percent.

Target Corp., hurt by weak sales of its Mervyn's clothing stores and Marshall Field's department store division, posted a 1.6 percent increase in same-store sales, below Wall Street estimates. Total sales were up 7.9 percent.

J.C. Penney Co. Inc., had a 2.3 percent decrease in same-store sales in its department store business. Analysts anticipated a decline of 1.3 percent. Total sales were down 0.9 percent.