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Apparel Retailers May See Higher Sales in October

U.S. apparel retailers saw a mild improvement in October following a very weak September, as higher sales of women's clothes offset a decline in menswear, according to data released Wednesday by SpendingPulse.

U.S. apparel sales rose 0.2 percent in October, SpendingPulse said, noting that although it was weaker than the year-earlier gain of 3.6 percent, the results were an improvement from the 0.9 percent decline in apparel sales in September.

Yet Michael McNamara, vice president of research and analysis for SpendingPulse, the retail data service of MasterCard unit MasterCard Advisors, cautioned against calling the improvement a rebound.

"If people are looking for a dramatic turnaround, I don't think they are going to see it in October compared to September," McNamara told Reuters. "But they might take some comfort in the fact that things didn't get worse."

SpendingPulse said sales of women's apparel rose 1.5 percent in October, while sales of men's apparel fell 1.2 percent. It bases its data on sales activity in the MasterCard payments network coupled with estimates for all other payment forms.

The figures offer an early indication of the strength of October same-store sales, which chains such as Wal-Mart Stores, J.C. Penney and Gap are due to report Wednesday afternoon and Thursday morning.

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Analysts and investors will watch closely for signs of a slowdown in consumer spending, which accounts for about two-thirds of gross domestic product in the United States.

Many retailers have already warned of consumers pulling back as they grapple with higher energy and food costs and higher mortgages, raising concerns about the strength of this year's holiday shopping season, which often accounts for more than a quarter of annual sales for many retailers.

Brean Murray Carret analyst Eric Beder, whose sentiments are typical of many Wall Street analysts, said he believes October was "another lackluster month for retailers, driven by poor weather, continued natural disasters in markets (California and Florida), weak traffic and a cautious consumer."

Warm Fall, Tepid Holiday

October 2007 was the warmest October ever recorded in New York City and one of the top five warmest ever for the United States, according to weather-tracking firm Planalytics.

The warm weather continued to pressure retailers still reeling from the unusually warm September, which allowed consumers to put off buying cold-weather items like sweaters and jackets.

While wildfires raged through southern California for about a week last month, burning more than 2,000 homes, a rainy Saturday in the mid-Atlantic region dampened sales for a day on the East Coast, McNamara said.

The women's apparel category, which rose 1.5 percent in October, saw its highest yearly comparisons since June, McNamara said, though he was quick to say comparisons were easy because last October was a weak month sandwiched between two very strong months.

McNamara also said the average price of women's apparel purchases in October was down 3.3 percent, though the average shopping volume was up 5 percent, evidence that retailers used mark-downs to drive sales.

McNamara said the October uptick did not change his holiday expectations.

"We still expect very modest growth this year. It'll probably be one of the weakest years we've seen in a couple, but it still looks like we're growing," McNamara said.

He added that some consumers are being hurt by gasoline prices that are about 30 percent higher than a year ago and higher mortgage payments as their adjustable rate loans get reset, but that employment figures and wages have been holding up.

Last week the U.S. Labor Department reported that nonfarm payrolls rose 166,000, twice what Wall Street had expected.

"There's been some hand wringing around the consumer in general as far as 'Is the consumer tapped out?'," McNamara said, noting that sales across most areas are much slower than a year ago. "But based on the data we're seeing you'd have to say the consumer is putting up a pretty good fight still."