U.S. retailers had their best month in more than a year in October as shoppers turned to discounters and high-end stores alike.
The news fueled a rally on Wall Street, helping to push the Dow Jones industrial average up 203.82 points, or 2.1 percent, to 10,005.96.
Year-over-year retail sales rose 1.8 percent, the best showing since June 2008 and the second consecutive month of gains, according to Thomson Reuters’ tally of 30 major chain stores.
In a promising note, upscale chains Nordstrom Inc. and Saks Inc. beat expectations, showing that affluent shoppers may be loosening their purse strings on high-end items.
“Further evidence of retail recovery continues to unfold as October comparable-store sales have outperformed the year-to-date reading in every category,” said Michael Niemira, chief economist of the International Council of Shopping Centers.
Retailers are hoping consumers will carry the momentum through the holiday season. But industry watchers warned that a full turnaround was still to come and cautioned that one reason the results were so strong was because it was easy to beat the dismal performance of October 2008, when sales fell 4.1 percent.
“We’re certainly in a consumer recovery, but it’s off of considerable lows,” Niemira said. “We’re sort of scraping our way out of the bottom.”
Now the big question is whether consumers will turn out in force at malls and other shopping destinations for the holidays. Many are still struggling with unemployment woes, which analysts say will be a huge factor in determining how the season will perform.
Not surprisingly, off-price retailers reported the biggest increases in October sales.
TJX Cos., parent to the T.J. Maxx and Marshalls chains, reported a 10 percent gain; sales at Ross Stores Inc. rose 9 percent.
But key high-end retailers also said their sales were up, leading to the first positive reading for the luxury sector since May 2008, Niemira said.
Nordstrom reported a 6.5 percent increase, better than the 3 percent gain analysts surveyed by Thomson Reuters had predicted, and Saks posted a 0.7 percent increase, better than the expected 3.6 percent drop.
Despite gains in most sectors last month, there were weaknesses in a couple of major categories: Sales at department stores fell 0.9 percent while the teen and children’s apparel sector missed expectations by posting a 5.8 percent drop.