NEW YORK — Despite concerns about unseasonably warm weather and economic pressures, many retailers' October sales beat analysts' lowered expectations, offering hope that consumer spending may remain resilient heading into the key holiday selling period.
Among 28 retailers that have reported their results, more than half exceeded estimates, Thomson Reuters data showed.
Retailers such as Limited Brands, Gap, Ross Stores and Macy's also lifted their third-quarter forecasts or gave an outlook that exceeded Wall Street estimates after they each reported better-than-expected October sales.
"The consumer still has some pent-up demand," said Keith Jelinek, director in the global retail practice at consultancy AlixPartners. "They want to spend."
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Encouraging October sales may not necessarily be an accurate indicator for the holiday season, some analysts said. October is the smallest sales month of the industry's fiscal third quarter and traditionally a period when stores clear out goods to make room for holiday merchandise.
"The month was very promotional, and fall merchandise sales were hurt by warm weather," said Jharonne Martis, analyst at Thomson Reuters, adding that aggregate sales for the month came in at 1.6 percent, the slowest growth rate since April.
Results also compared against reduced estimates. Analysts had cut their October estimate to a 1.7 percent increase from a 2.2 percent gain at the start of the month, according to Retail Metrics. The firm's tally showed more retailers missed expectations instead, turning in an overall 1.5 percent growth.
Surveys from different groups have also pointed to mixed consumer sentiment.
While the National Retail Federation and others have forecast consumers are poised to spend more this holiday season, a recent AlixPartners survey, for instance, said consumers plan to spend 8 percent less on holiday gifts.
Women's retailers such as Talbots and Coldwater Creek have lowered their profit or sales outlooks.
Consumer sentiment has been hurt by the U.S. jobless rate that's near 10 percent and a still-fragile economy. Meanwhile, the industry also is bracing for rising cotton and other costs with apparel manufacturers such as VF Corp. and Jones Group projecting price increases.
October sales results also continued to point to consumers shopping more for essentials than discretionary items, with the exception of luxury shoppers who have more spendable income, analysts said.
They also point to consumers driven to shop by events such as back to school or the holiday selling season, giving months like October few catalysts except the month-end Halloween shopping, analysts said.
For example, after sales got a boost in September from back-to-school purchases, teen retailer Abercrombie & Fitch Co., and rivals Aeropostale and American Eagle Outfitters all turned in disappointing sales with the latter two reporting unexpected drops. Abercrombie also said it will stop reporting monthly sales.