Chain store sales seen up again in October as consumers spend

NEW YORK ― October sales reports this week will show steady spending by U.S. consumers, as improving finances for many shoppers helped overcome a barrage of scary headlines about the economy.

October can be a slow month, falling in the lull between the back to school season and the start to year-end holiday shopping. But it does give retailers a read into shoppers’ mindset and intentions ahead of the Christmas blitz.

A tally issued by Thomson Reuters on Monday found that Wall Street analysts expect the 23 retailers in its index — including Costco Wholesale Corp and Macy’s Inc — to report a 4.7 percent increase in October sales at stores open at least a year, or same-store sales, well above the 1.6 percent increase in October 2010.

Most of the chains will report monthly sales on Wednesday and Thursday of this week.

“The consumer is out there spending,” said Craig Johnson, president of Customer Growth Partners. “Consumers are financially healthier now than they’ve been in years.”

Shoppers have paid down enough personal debt since the recession ended that those with jobs feel comfortable spending more and are doing just that, said Johnson, who last week forecast the best holiday season since 2004.

But they are not spending with the reckless abandon of a few years ago and insist on deals if they are to spend.

“As has been the case for the past year, there will be a focus on value. Shoppers will be lured to specific promotions, especially for mid-tier retailers,” said Paul Lejuez, a Nomura analyst.

Department stores should continue to show solid gains, particularly Macy’s Inc and Kohl’s Corp, which got boosts last month from their exclusive Karl Lagerfeld and J.Lo clothing lines, respectively.

At the high end, Nordstrom Inc. and Saks Inc. are also expected to report strong October sales, helped by luxury’s continued recovery.

Costco is expected to log the biggest gain in the survey, with higher gas prices contributing to a 8.7 percent jump. The last in class is expected to be Gap Inc., hurt by a 6.3 percent drop at its struggling North American flagship chain and an even steeper overall drop abroad.