UPDATE: U.S. Retail Sales Up in October Mostly Free of Sandy Hit

--Retailers showing same-store sales growth

--Period just missed devastating Hurricane Sandy

--Macy's beats expectations while Target misses.

(Adds results from additional retailers including Target, Macy's and Gap. Adds analyst quote)

   By Karen Talley and Joan E. Solsman 
 

U.S. retail sales rose in October, as retailers closed their books on the month before the brunt of Hurricane Sandy slammed the Northeast.

Target Corp.'s (TGT) same-store sales rose 2.4%, less than the expected 3.2% increase. "While October comparable-store sales were near the low end of our expected range, our third-quarter comparable-store sales increase of 2.9% was in line with our guidance," said CEO Gregg Steinhafel.

"As we enter the fourth quarter, we feel very good about our holiday-season merchandising and marketing plans," Mr. Steinhafel said.

Macy's Inc. (M) same-store sales increased 4.1%, handily beating expectations for 3.1%. "We are feeling confident about our prospects for the upcoming holiday season and have increased our sales guidance for the fall season, despite the interruption caused by Hurricane Sandy in the first few days" of the new quarter, CEO Terry Lundgren said. "The key growth strategies we put in place three years ago continue to provide us new opportunities."

Kohl's Corp. (KSS) said comparable-store sales rose 3.3%, when 1.1% was expected. For the month, the Midwest was Kohl's strongest region and children's was the strongest line of business. Kohl's also said it is following the trend of retailers that will no longer report same-store sales on a monthly basis. Kohl's will halt the practice early next year.

On the high end, Nordstrom Inc. (JWN) blew past estimates, posting a 9.8% rise in same-store sales, ahead of the expected increase of 6%.

Costco Wholesale Corp. (COST) posted a 5% rise in U.S. same-store sales minus gasoline, compared with the 5.6% increase that was expected. The warehouse chain saw customer traffic increase by 4% on a comparable-store basis.

By category, softlines increased by a high single-digit percentage, with strength in small appliances and men's and women's apparel.

Costco said a dozen of its warehouses were closed because of Sandy, which is expected to hurt November sales results. Costco couldn't quantify the hit but said it believed it would be small.

Gap Inc. (GPS) reported comparable-store sales rose 4%, when 5.1% was expected, a miss after showing some sustained momentum. Same-store sales rose 6% at North American namesake stores, 5% at Banana Republic and 5% at Old Navy, while international fell 2%. "We're very pleased with the continued momentum in the business across all brands in North America," CEO Glenn Murphy said.

Limited Brands Inc. (LTD) said same-store sales rose 3%, when 5% was expected. The retailer's comparable-sales growth slowed to 3% at its Victoria's Secret chain, despite consensus for a 6.1% gain, though Bath & Body Works reported strong results, posting a 5% increase when 4.9% was expected.

Limited Brands nonetheless raised its fiscal third-quarter earnings forecast as its net sales growth narrowly topped expectations.

The 17 retailers tracked by Thomson Reuters are expected to report 4.3% growth in October same-store sales, or sales at stores open more than a year. This compares with an increase of 4.1% a year ago. The retailers ended their fiscal October on Saturday, before Sandy reached the Northeast.

While business was "certainly disrupted," the storm "fell between two seasons--fall and holiday--so the overall effect on the quarter likely won't be as bad as some fear," said John Morris, retail analyst at BMO Capital Markets.

Department-store chain Stage Stores Inc. (SSI) again beat expectations with a 6.5% rise in same-store sales when just a 2.8% gain was expected. Sales in the categories of home and gifts, junior and misses sportswear were again strong, outperforming the company average; cosmetics and men's sportswear also outperformed. Geographically, all regions of the country had positive comparable sales, with the Midwest, Northeast, South Central and Southwest regions outperforming.

Teen retailer Zumiez Inc. (ZUMZ) reported a 0.6% increase, though 4.5% was expected. The company lowered its fiscal third-quarter earnings guidance, saying total sales for the full period were weaker than anticipated, primarily because of challenged selling in Europe. Fellow teen retailer Wet Seal Inc. (WTSLA) posted a 13.5% slump in comparable-store sales when a 10.5% decline was projected.

September same-store sales at teen-apparel retailer Buckle Inc. (BKE) rose 3.8%, while a decrease of 1.3% was expected.

Discount retailer Fred's Inc. (FRED) cut its earnings expectations for the third quarter and full year as same-store sales fell 0.8%.

Write to Karen Talley at [e-mail]

Write to Joan E. Solsman at [e-mail].