Retailers post steep sales drop

Penney, which said sales fell 13 percent from a year ago, was among stores cutting profit forecasts. DVDs attract shoppers at Wal-Mart, one of the few bright spots in the monthly statistics.

NEW YORK - The nation's retailers posted sharp drops yesterday in October sales.

The declines follow a weak September and foretell a holiday shopping season that many are characterizing as grim at best.

Michael P. Niemira, chief economist at the International Council of Shopping Centers, described October's performance as awful, saying, "This reflects the severity of the current financial crisis."

The council said it pared its forecast for what were already expected to be dismal holiday season sales. It now expects sales in November and December to rise 1 percent, down from its prior prediction of a gain of 1.7 percent.

According to the ICSC-Goldman Sachs index, sales fell 0.9 percent, the weakest October performance since at least 1969 when the index began.

The index is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer's health.

October's results compare with a 1 percent gain in September and was well below the 1.8 percent average increase so far this fiscal year, which for retailers begins in February.

Excluding Wal-Mart Stores Inc., the October sales number was down 4.6 percent.

A number of stores, including J.C. Penney Co. and Nordstrom Inc. cut their profit outlooks as they slashed prices to try to pull in shoppers.

Analysts expect a do-or-die holiday season for more retailers, which have already experienced liquidations by competitors including Mervyns LLC and Linens 'N' Things.

Wal-Mart, the world's largest retailer, benefited from shoppers focusing on basics. The discount chain said same-store sales rose 2.4 percent, better than the 1.6 gain projected by analysts surveyed by Thomson Reuters.

To win more market share during the crucial holiday selling season, Wal-Mart said it would introduce new price cuts every week until Christmas, reducing prices on thousands of items, such as toys and food.

Most other stores, from luxury merchants to teen retailers, suffered steep sales declines last month. Even warehouse club operator Costco Wholesale Corp. posted disappointing re-sults. It said sales declined 1 percent in October, compared with a 3.6 percent gain Wall Street projected.

Target Corp., which has lagged Wal-Mart because of its heavier emphasis on nonessentials, posted a 4.8 percent drop, worse than the 2.8 percent decline that analysts had expected.

Among department stores, Penney reported a 13 percent drop at its department store business, better than the 13.2 percent decline predicted. Macy's Inc. reported a 6.3 percent drop for October. No estimate from Thomson Reuters was available.

Luxury stores reported steep declines as affluent shoppers cut back on designer clothing. Luxury department store chain Neiman Marcus reported the deepest sales drop, 27.6 percent, in contrast to an increase of 7.8 percent a year ago.

Nordstrom's 15.7 percent drop was worse than the 13.1 percent decline expected. Saks Inc. recorded a 16.6 percent drop, more than the 11.8 percent decrease predicted.

Gap Inc.'s 16 percent drop was worse than the 11.1 percent decline Wall Street had forecast. Limited Brands Inc. reported a 9 percent drop in October, a bigger decline than the 7.2 percent analysts were expecting.

Even teens stayed away from malls. American Eagle Outfitters Inc. reported a steeper-than-expected 12 percent drop in same-store sales, and Abercrombie & Fitch Co. had a 20 percent drop.