Retailers Showing Mixed October Sales Results In Early Going

Retailers are turning in mixed sales for October, as consumers completed back-to-school buying and took a breather ahead of holiday buying.

In the early numbers, some standout results reflect the growing popularity of some retailers' offerings--and promotions--as well as efforts at one-upmanship.

"There is a market-share war that is heating up as we move into the holiday season and some retailers evidently are already pulling out the big guns, creating winners and losers," said John Long, retail strategist at Kurt Salmon Associates.

Target Corp. (TGT) posted a same-store sales rise of 1.7%, at the low end of the company's expectations but beating a 1.5% rise expected by analysts. The mass merchant in October began giving customers 5% off when they use its Visa or debit cards and has also aggressively been remodeling stores, with an emphasis on adding groceries as a way of bringing shoppers in. Target, however, said the environment remains uncertain.

Other winners so far include Limited Brands Inc. (LTD), which sharply boosted its fiscal third-quarter profit target after reporting October same-store sales jumped a bigger-than-expected 9%, as the parent of Victoria's Secret and Bath & Body Works continues its resurgence of late.

Two teen retailers diverged, with Zumiez Inc. (ZUMZ), which has been on a tear, posting a 22% jump in comparable store sales when a 7.8% rise was expected. Zumiez lifted its third-quarter earnings projection, citing better-than-anticipated demand and margins. Hot Topic (HOTT) showed an 8.5% same-store-sales drop when a 3.2% decline was projected, and said it expects earnings for the quarter ended Saturday to be at the low end of its August target.

Close-out chain Big Lots Inc. (BIG) saw sales fall off as back-to-school season wound down. "We began to experience more volatile and inconsistent sales trends in late September lasting through October," said Chief Executive Steve Fishman. "Our customers were very selective." Fishman added that if the price was right and the need was there, customers did respond, saying they were "still willing to spend money where they saw tremendous values as evidenced by the continued strength in certain of our higher ticket, discretionary categories."

Discounter merchandiser Fred's Inc. (FRED) saw same-store sales rise 1.2%, about half the amount that was expected, but said it expects third-quarter earnings to be in line with guidance.

The 28 retailers that report same-store sales, or sales at stores open at least a year, are expected to show a 1.6% growth, according to analysts polled by Thomson Reuters. Retailers posted 1.8% growth a year ago and, as a group, are now in their second month of comparing against positive numbers after a year of same-store sales declines. Wal-Mart Stores Inc. (WMT) does not report same-store sales.

The results are giving a taste of what retailers may expect for Christmas, more selective shopping from consumers who are still not comfortable with the economy. Projections for holiday season sales vary, ranging from a slight loss to over 4% growth, reflecting even economists' uncertainty about the season.

Unemployment remains close to 10% and consumer confidence is still very shy of robust, factors that will play into buying decisions.

The situation has also caused some retailers to already begin promoting Christmas. Sears Holdings Corp. (SHLD) is already advertising "Black Friday" specials. Toys R Us is promoting its catalogue of holiday toys and gadgets. In a sign of the kind of approach many retailers may take this holiday season, the Toys R Us catalogue has an application for smartphones and is Internet-friendly.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]