October US retail sales disappoint as shoppers pull back

Major retail chains posted disappointing October sales as consumers, stunned by a financial crisis that threatened to derail the U.S. economy, shunned all but the most crucial of purchases.

Discounter Wal-Mart Stores Inc stood out as one of the few bright spots. It posted a better-than-expected increase of 2.4 percent in October sales at U.S. stores open at least a year. Analysts had expected a 1.6 percent rise, according to Thomson Reuters data.

Other retailers, from Costco Wholesale Corp to Limited Brands Inc and Pacific Sunwear of California Inc, posted weaker-than-expected October sales on Thursday.

According to a preliminary tally of 16 retailers that had reported results on Thursday morning, Thomson Reuters said 60 percent missed expectations, while 33 percent beat.

To win more market share during the crucial holiday selling season, Wal-Mart said it will introduce new price cuts every week until Christmas, reducing prices on thousands of items, such as toys and food.

Stephen Quinn, Wal-Mart's chief marketing officer, told Reuters that the new initiative "takes the intensity up massively" on price cuts it declared last month on popular toys. The company's shares rose 0.4 percent premarket.

The October sales come as retailers head into what could be the weakest holiday season in two decades. While Thanksgiving weekend later this month traditionally marks the launch of the holiday shopping crush, retailers were already introducing discounts and sales to spur early buying.

The outlook for October sales worsened as the week progressed. Thomson Reuters initially forecast a decline of 0.1 percent on Monday, but its updated forecast on Wednesday called for a decrease of 0.3 percent.

"If the index actually comes in at -0.3 percent this would be the weakest same store sales result ever registered since we started collecting same store sales estimates in 2000," it said in a note.