NEW YORK — October’s better-than-anticipated same-store sales brought some cheer to retailers — several lifted third-quarter earnings projections — but analysts warned that it was premature to peg them as a harbinger of a robust holiday selling season.

Specialty retailers, such as American Eagle Outfitters Inc., which posted a 31.7 percent jump in comps at U.S. stores, and Bebe Stores Inc. with a 30.6 percent rise, as well as luxury retailers such as The Neiman Marcus Group, with a 13.6 percent advance, and Saks Inc., with a 4.4 percent gain, showed that consumers continued to search for unique and differentiated products.

Among the 50 retailers tracked by WWD, 40 companies reported positive October comps, the highest number since March, and 10 retailers had negative results. Among sectors, specialty chains had the best average comp increase, 6.1 percent higher, while mass merchants posted a 3.7 percent increase and department stores were up 2.7 percent.

Mike Niemira, director of research at the International Council of Shopping Centers, said the aggregate 4.1 percent increase in October among the 75 retailers he follows, against a forecast of 3 percent, was the best comp boost since May’s 5.7 percent rise. Still, he cautioned about using the month’s comps to get a definitive read on the future.

“Though October’s results should not be taken as a bellwether of how holiday sales will fare, they are at least a reassuring sign that sales will remain strong as we move closer to the traditional start of the holiday season,” Niemira said in a statement on Thursday. The ICSC forecast November same-stores sales — defined as sales in stores open at least a year — would go up 3 to 4 percent compared with a 3.7 percent rise in November 2003.

Similar to the ICSC’s results, Goldman Sachs Retail Composite Index posted its biggest comp increase in October, 4 percent, since May’s 5.5 percent increase.

Demonstrating the strength of the teen shopper, American Eagle and Bebe each posted October comps above 30 percent. American Eagle expects to earn 75 cents to 77 cents a share in the third quarter, up from a previous guidance of 67 cents to 69 cents. The company also forecast fourth-quarter earnings of 92 cents, matching analysts’ projections.Other standouts in the specialty space were Abercrombie & Fitch Co. and Talbots Inc. Abercrombie had a positive 11 percent rise in October comps, compared with a 14 percent drop in October 2003. Sue Riley, chief financial officer of Abercrombie, said in a recorded call that full-priced back-to-school selling drove the month in all three of the company’s brands.

Riley said, however, that the company believes “it is too early to interpret October’s sales as an indicator of holiday sales.” She added that the company is cautious on the fourth quarter.

And Talbots had a 4.7 percent October comp increase, significantly ahead of its expectations for a decrease in the low single digits. The company said in a statement that it sees third-quarter results at the high end of its estimate for 45 cents to 50 cents a share, adding that it is cautious on the fourth quarter, “given the volatility in the retail environment.”

In the discount space, Wal-Mart Stores Inc. posted a 2.8 percent increase in U.S. same-stores sales, at the lower end of its 2 to 4 percent guidance. Nevertheless, the company said earnings in the third quarter will come in at the high end of its 52 cents- to 54 cents-a-share range, citing gross margins that exceeded forecast.

Even though Wal-Mart is largely seen as a barometer of overall retail health, Janet Hoffman, a partner at Accenture Ltd.’s retail group, doesn’t think the rest of the retail sector should bank on Wal-Mart’s confidence for the holiday season. “We don’t have deep clarity into Wal-Mart’s numbers,” she said. “Are they really getting the two to three to four percent growth out of [sales of] food?”

Amid concerns about jobs and energy costs and a Conference Board report last week that consumer confidence hit a seven-month low in October, Merrill Lynch analyst Mark Friedman wrote in a research report that he sees a “good, not great,” Christmas season. “The biggest risk this holiday is that lower consumer confidence has the consumer less likely to splurge on themselves compared to last year.”

Factors outside of retailers’ control also benefited October same-store sales. They included pent-up demand from September, when same-store sales results were hampered by the four hurricanes that hit Florida and other sections of the East Coast, and significantly colder, more seasonally appropriate weather.“That lackluster September actually was not [an adequate reflection] of consumers’ ability to spend….They still had residual dollars from September left in their purse,” said Hoffman.

Successful merchandise initiatives also helped boost October, as margin strength was cited by several retailers, such as Wal-Mart, as a key aspect to the month’s results, Hoffman said.

“What we’re seeing is that the margins are attributable to improved planning — getting more of the right merchandise in the stores in the right time,” she said.

Although equity analyst Eric Beder of J.B. Hanauer & Co. said October’s comp results displayed a “relatively strong ‘bounce back’” from soft results in August and September, he, too, was hesitant to forecast a blowout holiday season.

“October should provide hope for the holidays….The consumer is definitely still a force,” Beder wrote in a Thursday research note. He said, however, that “the holidays will be a different beast, as the full effects of home heating oil and natural gas increases could dampen the middle- to lower-end consumers.”

Hoffman wasn’t worried about energy prices. “We would have already seen it if [high energy prices were] going to impact spending. Oil prices have been up for several months now. Unless we see a significant increase between now and the end of the year, [consumers] have already accommodated it in their spending.”

For her part, Hoffman is “very optimistic” about holiday spending. “I think this October is an indication…of the choices people had. They choose to spend, [which] gives me additional confidence that they’re going to stay on that roll throughout the holiday season.”

She noted now that the presidential election has passed, consumers will likely have even more time to spend. “Many people were consumed with observing the [election] activity,” she said.

October Same-Store Sales

 October 2004September 2004August 2004July 2004
Kohl’s 6-1.3-0.7-4.2
May Co.-2.2-1.5-6.7-5.5
Neiman Marcus 13.66.314.716.6
J.C. Penney (dept. stores)
Saks Dept. Store Group 5-
Saks Fifth Ave. Enterprises
Sears Roebuck (U.S. stores)1.9-3.2-6.1-2.6
Stage Stores1.82.58.1-7.8
Abercrombie & Fitch112-5-9
American Eagle (U.S. stores)31.723.326.621.7
Ann Taylor6.21.4-4.5-2.1
Banana Republic360-10
Charming Shoppes6-2-2-1
Chico’s FAS9.35.23.613.7
Christopher & Banks7-7-4-5
Deb Shops3.70.9-2.45.8
Dress Barn-4601
Gap (U.S. stores)7-10-3
Goody’s Family Clothing-1.7-9.13.5-4.5
Hot Topic-3.81.1-8.7-5
Limited Brands1-5-20
Mothers Work1-8.9-13-2.6
Old Navy4-6-1-2
Pacific Sunwear8.59.83.76
Rite Aid0.322.92.9
United Retail116-21
Wet Seal-15.5-8-14.8-14.7
Family Dollar0.91.5-0.11.4
Retail Ventures-0.2-7.3-4-2.3
Ross Stores4-5-8-5
Stein Mart12.
Target (discount stores)
Wal-Mart (discount stores)2.420.12.4

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