Retailers delivered solid sales gains in October that topped views Thursday as they carried over the momentum from a strong back-to-school-selling period.
Sales at stores open at least a year rose 5% vs. a year ago, says Ken Perkins, president of Retail Metrics. Analysts forecast a 4.6% rise. The results exclude drugstore chains.
Sixty-one percent of the companies in the survey beat views.
"It was a decent month, given the ongoing distractions of the presidential election coupled with the week-four distraction on the East Coast as consumers prepared for Hurricane Sandy's wrath," Perkins said.
The main driver for the month's solid showing was improvement in consumers' net worth resulting from rising home prices and a rising stock market, as well as a better economic picture, says Perkins.
Retailers also delivered solid gains in September with a 3.9% increase in same-store sales.
Overall, the consumer's mood is "one of cautious optimism, notwithstanding what's taken place on the East Coast resulting from Hurricane Sandy," Perkins added.
"Factoring out the unknown head winds created by Hurricane Sandy, the strong back-to-school selling period coupled with what appears to be an improving economy, the holiday should turn out to be pretty solid," he said.
The strength in October was across the board. High-end department store operatorNordstrom ( JWN ) saw the highest single monthly gain with a 9.8% rise in comps vs. a year ago, sailing past forecasts for a 6.5% rise.
Off-price retail operatorTJX ( TJX ) was another standout, seeing a 7% pop in comps vs. last year and handily topping views for a 3.9% gain. TJX also raised its earnings guidance for the third quarter.
Off-price retail operatorRoss Stores (ROST) saw a 4% increase in comps, slightly below forecasts for a 4.3% gain. With October's performance at the high end of the company's projections, it raised its earnings guidance for the third quarter.
Costco saw a 7% same-store sales gain, also ahead of forecasts. Macy's saw sales comps rise 4.1%, slightly ahead of views. Action-sports retailerZumiez (ZUMZ), which reported Wednesday, saw comps rise only 0.6% vs. a year earlier, well below forecasts for a 4.5% gain.
Zumiez lowered its guidance for the third quarter based on October's weak showing.
Michael Niemira, chief economist at the International Council of Shopping Centers, computes a 5% rise in October same-store sales vs. a year ago, excluding drugstores.
That compares with a 4.1% gain a year ago and 3.9% in September 2012.
The showing is also ahead of the fiscal year-to-date same-store sales growth of 4.7%, excluding drugstores, he says.
The 5% gain is healthy, he says.
"Overall, it was a good month and certainly a good lead-in to the holiday season," he said. "But there's plenty of uncertainty over the next few months, including any lingering effects from Hurricane Sandy and whatever the decisions are from Congress regarding higher taxes and reduced federal spending postelection."
Niemira says these numbers reflect a "very positive picture."
"I don't see anything that's particularly telling of change," he added. "The underlying performance continues to look good and strong, and the segments that have been strong like luxury continue to show a lot of strength."
The effect of Hurricane Sandy remains the wild card.
The vicious storm had a limited impact on October's results, Perkins says, noting that few retailers mentioned it in their sales reports.
Still, he adds, it may have been a boost to retailers that sell storm supplies, such asHome Depot (HD) andLowe's Cos. (LOW).
Then again, it likely hurt apparel retailers because consumers weren't thinking about updating their wardrobes in the midst of such devastation.
Niemira concurs Sandy's impact on October sales were "modest." He says strong pre-storm buying may have possibly given a lift in certain category sales.
November sales expectations should remain in line with October results, he adds, with some businesses being affected more severely by the aftermath of Sandy, but some holiday and replacement demand kicking in later in the month.
He expects November same-store sales to rise 4.5% to 5.5%, excluding drugstores.
He sees November-December holiday same-store sales to rise 3% vs. a year ago, slightly below the 3.3% pop in Christmas 2011.
While Perkins expects retailers to see a solid holiday, Hurricane Sandy's impact remains a big head wind.
The broader issue, he says, is millions of people have been affected by the storm.
The ripple effect: Hundreds of thousands of dollars in home damage could result in less money to spend for the holiday.