- The Washington Times - Thursday, November 3, 2005

NEW YORK (AP) — The outlook for the holiday shopping season brightened yesterday as many of the nation’s retailers reported that their sales improved in October with the arrival of colder weather and the easing of gasoline prices.

A variety of retailers including Wal-Mart Stores Inc., Costco Wholesale Corp., J.C. Penney Co. Inc. and Nordstrom Inc. beat Wall Street expectations. Apparel retailers Gap Inc. and Limited Brands Inc. again struggled with their fashion formulas and reported disappointing sales, but analysts were nonetheless more upbeat about the holidays for the industry overall.

“Consumers are hanging in there, despite facing significant pressure on their discretionary income” from still high energy prices, said Ken Perkins, president of Retail Metrics LLC, a research firm in Swampscott, Mass. “The glass is more full heading into the holiday season. The consumer doesn’t seem to be tapped out.”

The UBS-International Council of Shopping Centers’ October sales tally of 69 retailers rose a better-than-expected 4.4 percent, above the year-to-date average of 3.9 percent. The tally is based on same-store sales, those from stores open at least a year.

The results were surprising given retailers’ struggles throughout October, including the effects of Hurricane Wilma, the lingering fallout from Hurricanes Katrina and Rita, as well as some unseasonably warm weather that slowed sales of sweaters and coats.

In fact, the effect of the hurricanes was evident in a Labor Department report yesterday that showed job losses related to the storms, including Wilma, climbed to 521,400 last week.

The combination of the storms’ aftermath, including higher energy prices, are making Americans more pessimistic about the economy, as a consumer sentiment report from the Conference Board showed last week.

Amid such worries, retailers are preparing for a difficult holiday season with earlier-than-usual advertising campaigns and promises of deep discounting. Although gasoline prices have slipped back from $3-plus-per-gallon levels in recent weeks, they still are quite high, and home-heating costs are expected to soar this fall and winter, forcing many consumers to budget carefully.

This holiday season, the nation’s stores plan to lure shoppers with velvet clothing and romantic blouses. They also are hoping that home entertainment products, such as flat-screen TVs, will do well because consumers are expected to spend more time at home to conserve gasoline.

But, unlike last year’s holiday season, dominated by the IPod and other digital music players, there is “no clear direction,” according to Marshall Cohen, senior industry analyst at NPD Group Inc., a market research company in Port Washington, N.Y. “This year, the novelty [of consumer electronics] has worn off.”

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