Retailers suffer worst sales in more than 30 years

New York: Retail chains posted the worst October sales results in more than three decades as consumers cut spending sharply, stunned by a financial crisis that has derailed the US economy.

The International Council of Shopping Centres called the retail sales environment "simply awful" and said the October results were the worst it had seen for that month in 35 years.

The ICSC said it pared its forecast for what were already expected to be dismal holiday season sales. It now expect sales in November and December to rise 1 per cent, down from its prior view for a gain of 1.7 per cent.

"The great unknown is just how much lower can consumer spending go?" said Piper Jaffray analyst Jeff Klinefelter. "With savings rates at historic lows and constraints on the availability of consumer credit, I just think there's concern that the perfect storm is brewing."

Wal-Mart Stores Inc stood out as one of the few bright spots. It posted a better-than-expected 2.4 per cent rise in sales at US stores open at least a year. Analysts had forecast a 1.6 per cent gain, according to Thomson Reuters.

Wal-Mart's results were a sharp contrast to other discounters like Target Corp and Costco Wholesale Corp, which reported larger-than-expected same-store sales drops.

Across the sector, department store chains like Nordstrom Inc and specialty clothing retailers like Abercrombie & Fitch were among those hit hardest.

Shoppers have pared purchases of discretionary items like clothes or computers and in some cases are carefully planning when they buy the most basic necessities, like baby formula.

Thomson Reuters said its October same-store sales index fell 0.7 per cent, worse than its estimate for a 0.3 per cent drop. Based on results from 34 retailers, 56 per cent missed estimates.

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.

Wal-Mart Chief Marketing Officer Stephen Quinn said that the new initiative "takes the intensity up massively" on price cuts declared last month on popular toys.

The company's shares declined 0.5 per cent, outperforming a 4.2 per cent decline in the Standard & Poor's Retail Index. While Thanksgiving weekend later this month traditionally marks the start of the holiday shopping crush, other retailers were already introducing discounts to spur early buying.

In a fresh sign of trouble, women's apparel retailers Talbots Inc and AnnTaylor Stores Corp said they would restructure operations after posting steep sales drops.

Analysts had expected weak October sales after the financial crisis that began in the United States in September swept across the globe, stoking fears of a deep recession.

The crisis crimped spending even among the wealthy. Same-store sales fell 16.6 per cent at upscale department store chain Saks Inc and dropped 15.7 per cent at Nordstrom.

Saks said its shoppers were buying discounted items instead of full-priced merchandise, hurting its margins in the just-ended and current quarters.

At high-end teen apparel chain Abercrombie & Fitch, which has said it would not lower prices in an effort to maintain the status of its brand, same-store sales fell 20 per cent, worse than the 14.4 per cent drop analysts expected.

AnnTaylor shares slid 25 per cent, Talbots lost 9 per cent. Saks fell 3.4 per cent; Abercrombie gained 0.3 per cent.

BJ's Wholesale Club Inc, the No 3 U.S. warehouse club operator, said October same-store sales rose 10.2 percent, helped by strong sales of gasoline at its fuel stations.