After struggling over the last couple of months, strength in retail appears to be making a comeback just ahead of the big holiday shopping season. A plethora of retailers recently reported sales figures for October that indicate malls and shopping centers are once again the place to be.
The International Council of Shopping Centers reported a 4% gain based on results of 71 stores, which is the best performance since May. While there were some laggards in each segment, including apparel specialty stores, high-end retailers, and discount centers, there were more than enough positive surprises to generate impressive sales overall. The weather even helped things out for a change as cooler temperatures brought in more buyers of fall fashions.
The specialty retailers provided a broad spectrum of results in October. On one end sat American Eagle Outfitters (NASDAQ:AEOS), which reported a 31.7% jump in same-store sales. Total sales for the month soared 39% to $133.6 million. These results are not surprising as they are simply a continuation of last month's solid performance. Close behind was bebe (NASDAQ:BEBE), which posted a 30.6% jump in same-store sales. Children's Place (NASDAQ:PLCE) also continues to grow, generating a 21% increase in same-store sales, prompting the children's clothing specialist to boost third-quarter earnings expectations from $0.59 to $0.64 per share.
On the opposite side of the spectrum among the specialty retailers was -- surprise, surprise -- Wet Seal (NASDAQ:WTSLA), which failed to match the projected dismal 12.5% drop in sales, instead reporting a 15.5% decrease. Hot Topic (NASDAQ:HOTT) also remains cold as its October same-store sales fell by a more-than-expected rate of 3.8%. The company blamed the scary results on a 10% drop in sales of Halloween merchandise.
The high-end retailers posted impressive results overall for October. Leading the way was Neiman Marcus (NYSE:NMGA), which easily topped expectations with its 13.6% jump in same-store sales. Not to be outdone, Nordstrom (NYSE:JWN) nearly doubled expectations when it generated an increase of 11.5%. Federated Department Stores (NYSE:FD), the parent of Bloomingdale's and Macy's, managed a 4% increase in same-store sales. As a result of the strong performance, the company increased its third-quarter earnings expectations from the $0.30-$0.32 range all the way to $0.38-$0.40 per share.
And finally, though they weren't quite as impressive as the upscale stores, the discount shopping centers also performed fairly well. Wal-Mart (NYSE:WMT) was the least impressive as it ended in the low end of earlier forecasts and just below the 3% forecast with its 2.8% same-store sales growth. No need to pity the discount king, however, as improved gross margins and a better tax rate will likely allow it to report third-quarter profits at the high end of its projected range. A bit more impressive was Target (NYSE:TGT), which increased same-store sales by 6% for the month. And boosted by strong international sales, Motley Fool Stock Advisor recommendation Costco (NASDAQ:COST) generated an increase of 8%.
Overall, the retail segment looks to be gaining strength. As we head into the frantic holiday shopping season, this should be an exciting area to keep an eye on. If you shop carefully, you should be able to find some great deals in the sector.
Fool contributor Mike Cianciolo welcomes feedback. He doesn't own stock in any companies mentioned in this article.
