NEW YORK (AP) — Americans were shopping in October, but they were spending at a slower clip than expected as they faced a barrage of bad economic news.
October revenue at stores open at least a year — an indicator of a retailer's health — rose 3.7 percent from the same month a year ago, according to the International Council of Shopping Centers' tally of 25 retailers.
But October's increase is weaker than the 5.5 percent revenue gain in the prior month. And 13 of 19 retailers missed Wall Street estimates for October revenue, according to Thomson Reuters, including big merchants like Macy's, Saks and Target.
The results reflect Americans' cautious spending habits. Consumers continue to worry about the challenges of the weak economy, including high unemployment and a weak housing market. At the same time, those who have jobs have paid down their debt since the recession and are starting to feel more comfortable about spending. Retailers hope they'll continue to do so during the holiday shopping season, but so far, consumers aren't giving them a clear sign they will.
"The softer trend in my mind raises questions of whether this is a new trend or a temporary respite before it gets back to stronger spending," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
The National Retail Federation, the nation's largest retail trade group, predicts revenue in November and December will rise 2.8 percent to $465.6 billion this year. That would be smaller than the 5.2 percent increase last year, but higher than the average over the last 10 years.
"Consumers are regrouping and retrenching and saving their pennies for the holiday season," said Ken Perkins, president of Retail Metrics, a research firm
But stores likely will have to work hard to get people to part with their money during the season.
Many retailers already are beginning to offer holiday discounts to draw shoppers in early. Amazon.com, for instance, just launched a sale this week that included such deals as a10-carat white gold diamond studded earrings marked down to $270 from $1,199.99.
"This is an effort to stimulate the holiday season to be longer and longer," said Janet Hoffman, managing director of Accenture's global retailing practice.
Retailers are doing more than discounting. Some, like Wal-Mart Stores Inc., are offering to match the cheaper prices consumers find at competitors. And other stores, including Target and Macy's, this week have announced expanded hours on Black Friday, the day after Thanksgiving and the official kickoff to the holiday season.
Retailers have some reason to be optimistic that the incentives will work.
Although October results weren't as promising as retailers had hoped, revenue was impacted by unseasonably warm weather during the beginning of the month and then a snowstorm at the end of the month. And most merchants reported revenue that was only slightly off from Wall Street estimates.
Wholesale club operators Costco Wholesale Corp.'s revenue at stores open at least a year climbed 9 percent in October, for instance, slightly lower than the 9.2 percent increase analysts surveyed by Thomson Reuters had predicted. And Limited Brands said revenue at stores open at least a year rose 6 percent in October, down from analysts' estimates of 6.2 percent.
A few merchants reported much more disappointing results. Target's 3.3 percent increase was below the 4.2 percent gain expected by Wall Street.
And Macy's Inc. posted a 2.2 percent increase in revenue at stores opened at least a year, which fell short of the 3.6 percent increase that Wall Street analysts had anticipated. The department store chain said revenue was hurt in part by the snowstorm at the end of the month that kept shoppers at home and warm weather during the rest of the month that kept them from buying winter clothes.
Luxury retailers, which had benefited from brisk spending by their well-heeled shoppers, also showed a slowdown. Saks Inc. had a 1.8 percent increase, which was much lower than the 5.4 percent gain that analysts had expected.