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Nation's Shoppers Continue Their Months-Long Spree

Retailing:October sales climb more than 4%, two reports say, raising expectations for strong holiday season.


Consumers continued their spending spree in October despite uncertain economic news, leading to predictions Thursday that the coming holiday season might rank among the strongest this decade.

Shoppers ignored the roiling stock market and signs of an economic slowdown to drive retail sales up by more than 4% in October, beating analysts' expectations. Discount stores and specialty retailers showed the biggest gains.

The Bank of Tokyo-Mitsubishi said same-store sales at the nation's leading retailers climbed 4.8% in October. The Lehman Bros. retail sales index, another leading measure, put the same-store sales growth slightly lower, at 4.5% for the month.

Same-store sales measure results at stores open at least a year and are considered the most accurate measure of a retailer's performance.

The spending reports come amid mixed economic news, with the U.S. Labor Department reporting lackluster job growth for October. But analysts said that barring any severe downturn, there is good reason to expect consumers to continue spending at a healthy clip through this month and December and into next year.

"Interest rates are low, there's high employment and job security, and the real estate market is strong," said Richard Giss, a partner in the Consumer Business Practice Group at the Los Angeles offices of Deloitte & Touche. "The underlying economics for consumer spending are excellent."

The National Retail Federation, an industry trade group, expects an overall holiday sales gain of 5% to 6% over the same November-December period last year.

The trade group is forecasting weaker sales growth in Southern California, however, where Asian tourism has already taken a toll on retailers, particularly luxury chains. And with California outpacing the nation in household formation, new homeowners have less money left over for shopping sprees, analysts said. An NRF pollster predicted that holiday sales would rise by only 3% in Southern California.

Last year, the region outpaced the nation.

Department store chains said their October performance was affected by unseasonably warm weather, which tends to discourage purchases of cold-weather clothing.

Overall, the sales record was mixed.

May Department Stores, operator of the Robinsons-May chain, reported a moderate gain of 2.8% over October of last year but the slump at most major department stores continued. Federated Department Stores dipped 1.9%, Dillard's dropped 4%, Sears fell 1.9% and J.C. Penney dropped 2.8%.

Sales at Gap Inc.--operator of the Gap, Banana Republic and Old Navy clothing chains--surged 18%. Talbots and AnnTaylor, sellers of women's career clothing, reported gains of 26% and 16%, respectively.

Discounters also had a good month. Wal-Mart Stores led the way with a 7.7% gain, and K mart reported a 4% rise. Target, the fashion leader among discounters, reported a rise of 4.2%. Dayton Hudson, which owns Target as well as the troubled Mervyn's chain, said sales at Mervyn's declined 3.9%

"Overall, it was a pretty respectable month," said Michael Exstein, an industry analyst at Credit Suisse First Boston in New York.

Many of Southern California's shopping center operators are optimistic about the holiday season. The sales pace has been strong at Camarillo Premium Outlets in Camarillo and at Desert Hills Premium Outlets in Cabazon, said Michele Rothstein, marketing manager of Chelsea GCA, a Roseland, N.J., mall operator with 21 shopping centers in 12 states.

"Store traffic is rising, and that's always a good indication that we'll have a good Christmas," she said.

Inventory levels at stores in the Century City Shopping Center in Los Angeles are moderately higher than at this time a year ago--a sign that retailers expect more demand this holiday season, said Linda Frost, marketing manager at the Westside mall.

"We're expecting a good, solid Christmas with sales increases in the 4% to 5% range," she said. "We estimate that October sales were in the 3.5% range.

October sales reports are not always an indicator of holiday season performance, but that has been the case in recent years. Sales for October 1997 rose 4.8%, very close to the 4.5% average increases for November and December of that year. Also, October 1996 sales rose 3.3%, compared to the average holiday rise of 3.2%.

Local shoppers' outlooks varied.

"I think the stock market has stabilized a bit, so I think we'll be OK for now," said Pasadena resident Jimmy Hines, commenting during an outing at the Glendale Galleria. "People seem to still be going out and spending money. I know a lot of friends who will, and I probably will too."

However, some Galleria shoppers worry about another financial issue--the Asian economic crisis.

"You see what's been happening in Asia and you can't help but wonder if that's going to happen here," said Burbank resident Sally Pembroke. "So far, things seem to be OK, but you never know what will happen in the next six months."

This year's prize for most organized shopper may well go to Toinette Campbell, 35, of Burbank.

While taking a break from shopping to feed her 8-month-old son Gregor, Campbell pointed to a lone shopping bag tucked neatly into the back of Gregor's stroller.

"That's a wedding gift," she said. "My Christmas gifts are all bought and shipped already. I'm all done."


Times staff writers Karen Robinson-Jacobs and Ken Woo contributed to this report.

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