UPDATE: Retailers Showing Mixed October Sales Results

Retailers are turning in mixed sales for October, as consumers completed back-to-school buying and took a breather ahead of holiday buying.

Some standout results reflect the growing popularity of some retailers' offerings--and promotions--as well as efforts at one-upmanship.

"There is a market-share war that is heating up as we move into the holiday season and some retailers evidently are already pulling out the big guns, creating winners and losers," said John Long, retail strategist at Kurt Salmon Associates.

Macy's Inc. (M) posted a 2.5% rise in October same-store sales when a 1.6% gain was projected. The department store raised its earnings and same-store sales growth guidance for the second half of the year. "While we experienced some softness in sales early in October given the unseasonably warm weather, we ended the month with a strong trend going into the holiday selling season," said Chief Executive Officer Terry Lundgren.

Macy's may be taking market share from two of its chief rivals. J.C. Penney Co. (JCP) reported a 1.9% drop in comparable store sales and Kohl's Corp. (KSS) posted a 2.5% decline, when both department stores were expected to report gains.

"Strong performance in the second half of the month partially offset lower sales in the first two weeks of the month due to unseasonable weather," Kohl's Chief Executive Officer Kevin Mansell said.

Target Corp. (TGT) posted a same-store sales rise of 1.7%, at the low end of the company's expectations but beating a 1.5% rise expected by analysts. The mass merchant in October began giving customers 5% off when they use its Visa or debit cards and has also aggressively been remodeling stores, with an emphasis on adding groceries as a way of bringing shoppers in. Target, however, said the environment remains uncertain.

Luxury fared well in October with Saks Inc. (SKS) posting an 8.1% jump in same-store sales for the month, sailing past the moderate 2% rise analysts had expected. The company said the strongest sellers at its Saks Fifth Avenue stores were women's shoes, women's apparel, men's sportswear, cosmetics, and fragrances. Saks said it continues to expect "comparable store sales growth in the mid-single digit range" in the second half of the year.

Nordstrom Inc. (JWN) also beat expectations, posting a 3.4% increase in same-store sales compared with the 2.7% rise analysts were expecting.

Other winners so far include Limited Brands Inc. (LTD), which sharply boosted its fiscal third-quarter profit target after reporting October same-store sales jumped a bigger-than-expected 9%, as the parent of Victoria's Secret and Bath & Body Works continues its resurgence of late.

Aeropostale Inc. (ARO) appears to be a victim of the pricing wars among teen retailers, posting a 2% drop in October same-store sales when analysts expected a 3.1% rise. The company is being pinched as other chains that sell teen apparel, like Abercrombie & Fitch Co. (ANF) and American Eagle Outfitters Inc. (AEO) have been lowering prices, encroaching on Aeropostale's corner of the market.

Also in the teen sector, Zumiez Inc. (ZUMZ), which has been on a tear, posted a 22% jump in comparable store sales when a 7.8% rise was expected. Zumiez lifted its third-quarter earnings projection, citing better-than-anticipated demand and margins. However, Hot Topic (HOTT) showed an 8.5% same-store-sales drop when a 3.2% decline was projected, and said it expects earnings for the quarter ended Saturday to be at the low end of its August target.

Close-out chain Big Lots Inc. (BIG) saw sales fall off as back-to-school season wound down. "We began to experience more volatile and inconsistent sales trends in late September lasting through October," said Chief Executive Officer Steve Fishman. "Our customers were very selective." Fishman added that if the price was right and the need was there, customers did respond, saying they were "still willing to spend money where they saw tremendous values as evidenced by the continued strength in certain of our higher ticket, discretionary categories."

Discount merchandiser Fred's Inc. (FRED) saw same-store sales rise 1.2%, about half the amount that was expected, but said it expects third-quarter earnings to be in line with guidance.

The 28 retailers that report same-store sales, or sales at stores open at least a year, are expected to show a 1.6% growth, according to analysts polled by Thomson Reuters. Retailers posted 1.8% growth a year ago and, as a group, are now in their second month of comparing against positive numbers after a year of same-store sales declines. Wal-Mart Stores Inc. (WMT) does not report same-store sales.

The results are giving a taste of what retailers may expect for Christmas, more selective shopping from consumers who are still not comfortable with the economy. Projections for holiday season sales vary, ranging from a slight loss to over 4% growth, reflecting even economists' uncertainty about the season.

Unemployment remains close to 10% and consumer confidence is still very shy of robust, factors that will play into buying decisions.

The situation has also caused some retailers to already begin promoting Christmas. Sears Holdings Corp. (SHLD) is already advertising "Black Friday" specials. Toys R Us is promoting its catalogue of holiday toys and gadgets. In a sign of the kind of approach many retailers may take this holiday season, the Toys R Us catalogue has an application for smartphones and is Internet-friendly.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

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