Retail Sales Grow 4.4%

U.S. retailers Thursday reported their strongest sales gain in four months, bolstering expectations for the holiday shopping season.

A drop in gasoline prices and cooler weather lifted spending on fall apparel.

Wal-Mart Stores Inc., Target Corp., J.C. Penney Co. and Nordstrom Inc. beat their own or analysts’ expectations.

October sales at stores open at least a year rose 4.4%, better than expected and the biggest gain since June, the International Council of Shopping Centers said.

Retailers benefited as the average price of gasoline fell about 15%, temperatures dropped and shoppers returned to stores in the South after hurricanes Katrina and Rita.

“Retailers have come through with very solid reports,” said Donald Gher, chief investment officer of Coldstream Capital Management of Bellevue, Wash., which has $900 million under management, including Wal-Mart shares. “We felt that the drop in gas prices would help. More importantly, we saw the weather shift, which really helped in the last week of the month.”

Discount chains, department stores and retailers catering to luxury shoppers and teenagers posted gains on demand for girls’ and boys’ apparel and shoes. Specialty stores -- notably Gap Inc., Limited Brands Inc. and Talbots Inc. -- reported same-store sales declines.

“Momentum toward the end of the month is a good sign heading into the holiday season,” said Michael P. Niemira, chief economist at the New York-based shopping center council, which tracks about 80 chains.

Macy’s owner Federated Department Stores Inc., which completed its acquisition of May Department Stores Co. during the quarter, said October same-store sales fell 0.7% because Hurricane Wilma caused significant damage in Florida.

Warehouse club operator Costco Wholesale Corp. posted a 10% gain, benefiting from the sale of gasoline at prices higher than a year earlier.

Retailers “may make it on the sales side,” Gher said. “The question is whether they will make it on the earnings side.”

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Fall surge

Year-over-year percentage change in October sales at stores open at least a year

*--* Company % change Wet Seal +46.6 Guess +12.3 Pacific Sunwear +7.9 Ross +7.0 Nordstrom +6.4 Target +5.7 Wal-Mart +4.3 J.C. Penney +2.4 Bebe +2.1 Federated -0.7 Limited Brands -4.0 Gap -5.0 Hot Topic -5.7 Sharper Image -18.0

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Sources: Times research, company reports