Stores are heading into the period with slashed inventories, determined not to have the fire sales that characterized last Christmas. But shoppers are still facing tight credit and a weak job market and might wait for fat discounts or not buy at all. That game of chicken will determine the holiday winners and losers.
"Shoppers are still being cautious, but we are seeing some signs of recovery in the economy," said Carl Steidtmann, an economist at Deloitte Research, who forecasts holiday sales will be unchanged from a year ago.
According to the International Council of Shopping Centers-Goldman Sachs tally, sales were up 2.1 percent in October compared with a 4.2 percent drop a year ago. The reading follows a surprise 0.6 percent gain in September and marked the strongest performance since April 2008. The figures are based on sales at stores opened at least a year and are considered a key indicator of a retailer's health.
The biggest surprise came from luxury stores like Saks Inc. and Nordstrom Inc., which have suffered as its wealthy shoppers slash spending on status goods. The category enjoyed a 1.8 percent gain in October, its first increase since May 2008, but that reading compares with a 19.2 percent plunge a year ago, according to ICSC-Goldman Sachs.
Many teen merchants, particularly Abercrombie & Fitch and Amerian Eagle Outfitters Inc. suffered, as teens may be looking for less expensive alternatives.
Michael P. Niemira, chief economist at ICSC, predicts sales growth for November will be from 5 to 8 percent compared with a year ago.