October Retail Sales Expected to Show Gains

According to The Wall Street Journal, retailers are reporting some encouraging trends from October as they head into the holiday shopping season.

Sales during the month, traditionally a time of fall clearance, were better than expected for many retailers, according to analysts’ estimates. Although October sales patterns typically don’t predict holiday sales trends, retail executives point to signs of pent-up demand and a gradual return of shoppers.

Thursday, dozens of chain-store retailers will report sales for October and their fiscal third quarters. Retail Metrics, which compiles analysts’ estimates as well as other industry data for 31 companies, projects a 1.9% increase in October sales over the same month last year. Thomson Reuters, which aggregates analysts’ estimates for 30 companies, predicts a 2% increase.

The projected monthly gain would be the second year-over-year increase after 12 consecutive months of declines for retailers.

Apparel spending rose 3.4% in October this year compared with last, the first year-over-year increase in 14 months, according to Mastercard Spending Pulse, which tracks spending by credit cards, checks and cash. But a return to pre-recession levels remains a ways off. Apparel spending for the month was down 5.2% compared with that of October 2007.

October isn’t typically a strong sales month for retailers, providing a lull between the back-to-school shopping in August and September and the start of holiday shopping in November.

Retailers are in a stronger position than a year ago. Inventory levels are much leaner, meaning fewer dramatic markdowns to clear excess wares. And most of the promotions have been carefully planned. That could help lift retailers’ profit margins.

Still, the Conference Board said last week that consumer confidence fell in October for the second consecutive month this year, largely because of consumers’ worries about the job market.