By  on November 9, 2007

Even Ben Bernanke has weighed in on the holiday season.

The Federal Reserve Chairman said he is somewhat optimistic when it comes to holiday selling. Bernanke testified in front of Congress' Joint Economic Committee on Thursday, saying increased energy prices will cause a rise in inflation. He also does not expect the mortgage crisis to lighten up near term, but amid these economic woes he believes the economy is resilient.

And despite October same-store sales, promises of cleaned-up inventories and reiterated guidance have given Wall Street a glimmer of hope.

Still, October was a tough month. The ongoing credit and foreclosure woes, rising gas prices and unseasonable weather had a negative impact on same-store sales. Given current economic conditions, the mass merchants continued to outperform the pack.

Of the retailers tracked by WWD, the discounters posted an average same-store sales gain of 2.1 percent while department stores and specialty retailers fell 0.7 percent and 2.1 percent, respectively.

The overall weak sales reports pushed the S&P Retail Index down 0.3 percent to 429.36, which was steeper than the broader S&P 500 decline of 0.1 percent to 1,474.77. However, investors liked what they heard from companies in regard to inventory levels and went picking through the channel. As a result, shares of Aéropostale Inc. gained 5 percent to $22.98, Abercrombie & Fitch Co. rose 2.59 percent to $74.50 and Stein Mart Inc. finished the day up 14 percent to $6.33.

The constant media frenzy over the housing crisis and gas prices have made it hard for consumers to ignore these macro issues while shopping, which contributed to last month's weak sales, said Patricia Walker, partner at the consulting firm Accenture.

Unseasonable weather has stifled "wear now" fall and winter apparel, leaving many retailers with excess inventory and forcing early markdowns, according to Retail Metrics. Wal-Mart Stores Inc., J.C. Penney Co. Inc. and Kohl's Corp., among others, have already offered door-buster specials to attract consumer attention and improve weak traffic. But while discounting will play a big part this holiday season, most of the sales were planned promotions.

As part of a commitment to save people money, Wal-Mart kicked off the Christmas season earlier this year with Black Friday prices on five top gift ideas. Similar promotional activity will continue into December. For October, the megaretailer posted a 0.7 percent increase in same-store sales, below analysts' forecast of a 1.1 percent increase.

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