Retail Chains Ring Up Strong Sales October Results Raise Expectations For Crucial Holiday Season

U.S. retailers said sales in October rose the most since May, as demand for clothing and designer fashions offset declining sales of stereos and other electronics.

Sales at stores open at least a year rose 4.9 percent, according to Bloomberg’s industry index, the high end of expectations. The higher sales bode well for apparel chains, with Limited Inc. and AnnTaylor Stores Corp. already predicting better-than-expected third-quarter earnings.

Shoppers’ renewed interest in clothing could mean retailers won’t see a repeat of last year’s holiday season, one of their worst in decades.

“Last year, hard goods like computers and electronics carried the retail industry,” said Jay Meltzer, an analyst with LJR Redbook Research. “This year the fashion is better, people need clothes and they are buying apparel.”

Midprice department store chains such as J.C. Penney Co. and specialty apparel retailers did particularly well in October. While sales at discount chains trailed, they still turned in decent gains.

Clothing sales have picked up as retailers offer more attractive fashions, especially the updated classics by designers such as Tommy Hilfiger and Calvin Klein.

“It’s the best fall season apparel retailers have had in the ‘90s,” said Alan Millstein, publisher of Fashion Network Report. “Consumers have found the widest diversity of new fashions this decade.”

The results were also boosted by the comparison to last year’s unusually poor sales. The 0.5 percent increase in same-store sales last October started a swoon that continued through the winter.

A relatively strong economy also points toward a strong holiday selling season, with Americans earning more and consumer confidence hovering near a six-year high. One potential problem is that consumers are saving rather than spending.

Many retailers report their sales results on the Thursday of the first full week of the month. Same-store sales are considered the best measure for gauging a retailer’s sales strength because the figure doesn’t include the effects of recent store openings, closings and expansions, which can boost the results.

Department store chains fared the best, with same-store sales rising 6.8 percent, the most since January 1995.

J.C. Penney’s same-store sales gained 13 percent, leading the pack.

Dayton Hudson Corp., which operates the Target and Mervyn’s chains, said same-store sales rose 6 percent. Sears, Roebuck & Co. reported a 5.3 percent increase in domestic same-store sales.

Federated Department Stores Inc., which operates Macy’s, Bloomingdale’s and The Bon Marche, rose 4.9 percent.

Among the chains specializing in apparel, off-price retailer Ross Stores Inc. fared best with a 17 percent gain.

Among the major discounters reporting, Wal-Mart Stores Inc. said its same-store sales rose 4.2 percent. Kmart Corp.’s U.S. same-store sales rose 1.5 percent.

Retailers that sell electronics fared the worst.

Best Buy Co., one of the largest consumer electronics chain, said its same-store sales fell 15 percent in October.