Wal-Mart, Others Cut Holiday Expectations

Prospects for a strong holiday season grew dimmer in early November as the nation’s largest retailers reported generally disappointing sales results for October.

While many specialty apparel retailers, including Talbots and Wet Seal Inc., enjoyed healthy sales, many other stores languished amid slowing consumer spending.

Although some stores tried to put a positive spin on October’s lackluster results, blaming such temporary factors as unseasonably warm weather in the Northeast and a lack of must-have fashions, many industry executives believe retailing’s problems run much deeper.

The slowing economy, rising fuel prices and the stock market’s volatility have prompted consumers to be much more cautious about spending on discretionary items, or merchandise they don’t actually need.

The weak sales environment prompted a number of companies, including Wal-Mart Stores Inc., the world’s largest retailer and usually one of the industry’s best performers, and jeweler Zales Corp. to lower their sales expectations for the holiday season.

And J.C. Penney Co. Inc., which didn’t meet its sales target for the month, said it expected its third-quarter earnings loss to at least double recent forecasts.

October isn’t considered a make-or-break month for sales, but rather a transitional period when stores clear out fall merchandise and move into holiday velvets. However, even the heavy clearance sales didn’t spark spending.

What shocked many analysts in particular was the disappointing sales results from discounters, which are seen as the bellwether in consumer spending.

Wal-Mart attributed its lower sales projections for the fourth quarter to declining traffic in its stores. It now expects its sales growth to be in the 3-5 percent range, below analysts’ expectations of 4-6 percent.

However, Wal-Mart reported a 4.9 percent increase in October sales at stores open at least a year, meeting Wall Street targets.

Sales at stores open at least a year, known as same-store sales, are the most widely used measure of retailers’ strength.