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October Retail Sales Increase 3.1 Percent

Better-than-expected apparel sales and lower gasoline prices pumped up retail sales in October.

WASHINGTON — Better-than-expected apparel sales and lower gasoline prices pumped up retail sales in October.

A monthly Commerce Department report issued Tuesday stated apparel and accessories store sales rose a seasonally adjusted 3.1 percent to $17.21 billion in October over September. Compared with a year ago, sales were up 6.5 percent at these stores.

Department stores didn’t fare quite as well, inching up 1.5 percent last month to $17.9 billion, but falling 0.6 percent from a year earlier.

“The holiday sales will pick up as we move through this month and get closer to Thanksgiving,” said Peter Morici, professor at the University of Maryland’s Robert H. Smith School of Business. “The falling gas prices will bring people out, but it’s not going to be the wild Nineties.”

The holiday season, as has become standard, will include plenty of discounting by retailers, Morici said.

Even though energy prices have fallen from recent highs, filling the gas tank and heating the home will still be competing in family budgets with discretionary purchases, such as apparel. A gallon of regular gas sold for an average of $2.29 Tuesday, down from $2.77 a month ago, but still above the year-ago average of $1.97, according to the American Automobile Association. Warm weather in some parts of the U.S. has so far delayed the impact of higher home heating costs.

Across the economy, retail and food service sales dropped 0.1 percent during October, but were 5.7 percent above a year earlier.

The impact of a record hurricane season was still being felt by consumers, said Ken Goldstein, an economist at The Conference Board.

“Katrina wrecked the consumer market probably for a good six-month period of time,” he said. “[Consumers] look at this with one filter and that’s, ‘What does this mean to me?’ What they think it means is that job openings are going to be scarce for the next six-month period of time … People who turn a little bit more cautious tend to keep their hands in their pockets a little longer.”

Goldstein said the holiday season and the start of 2006, especially with higher home-heating costs, may still turn out to be poor one for retailers.

This story first appeared in the November 16, 2005 issue of WWD.  Subscribe Today.