Retail sales bombed in October
— -- Major retailers reported the sharpest declines in October sales in about four decades Thursday, raising questions about whether the holiday shopping season will be even bleaker than the already dire predictions.
Double-digit decreases became the norm, and luxury retailers were among the hardest hit. But, as throughout the economic downturn, Wal-Mart wmt continued to fare the best of the bunch, this time with a 1.6% increase in October same-store sales over last year. Wal-Mart's U.S. CEO Eduardo Castro-Wright credited the discounter's low prices for the fact that "we see more customers shopping more often at Wal-Mart."
"Clearly, the message is: Consumers are trading down," agrees Patricia Walker, a partner in Accenture's retail practice. "What consumers are spending money on is necessities at low prices."
It's gotten so bad that retail analyst Jennifer Black asks, "Is negative 10 the new flat?" Indeed, retailers ranging from J.C. Penney jcp to Gap gps reported sales declines of more than 10%. Penney's sales were down 13%, and Gap declined 16%.
Against this backdrop, the 6.3% monthly decline for Macy's m (which includes Bloomingdale's) seemed almost impressive.
Saks sks, which announced Wednesday that it plans to close its 'tween girl stores Club Libby Lu, reported its sales were down 16%, some of the best evidence yet that the economy is hitting luxury shoppers hard, too.
Target tgt— which has lagged behind Wal-Mart in recent months because of its heavier emphasis on non-essentials — posted a 4.8% drop, worse than the 2.8% decline that analysts had expected.
Warehouse club operator Costco Wholesale cost, which sells items such as TVs along with basics, posted disappointing results. The company, hurt by currency effects, reported a 1% decline in October. Analysts surveyed by Thomson Reuters expected a gain of 3.6%.
Teens also scaled back spending. American Eagle Outfitters aeo reported a 12% drop in same-store sales, worse than the 8% decline predicted, while Abercrombie & Fitch anf suffered a 20% drop last month, steeper than the 14.4% decline expected. Wet Seal wtsla saw its same-store sales fall 6.2%, less than the 8.6% decline expected. The teen retailer said it now expects third-quarter profit at the high end of its guidance.
The International Council of Shopping Centers has been tracking monthly sales in the key retail sectors, including department, drug and specialty apparel stores, since 1969. The 0.9% decrease in sales at the retailers ICSC tracks was the worst October performance since ICSC started compiling its index 39 years ago. The "simply awful" sales, as ICSC chief economist Michael Niemira put it, prompted the council to lower its forecast to 1% growth this holiday season.
The National Retail Federation, which in September predicted paltry 2.2% growth in holiday retail sales, plans to reassess its prediction after reviewing more consumer surveys from October, says spokeswoman Ellen Davis.
NRF believes there is some reason for optimism that sales will bounce back a bit, Davis says. She says surveys show people are planning more "non-gift" purchases before the holidays to take advantage of sales, which suggests one reason people may have been holding back. NRF also believes all the political advertising focusing on the economy likely made consumers even more cautious.
"Consumers are really focused on the holidays this year and may have been making concessions in the last few months to have a cushion," Davis says. "We weren't really expecting great things from September and October, but with gas prices down and the election over, the tide is turning from bad news to good."
Contributing: The Associated Press