Hopes for a successful Christmas shopping season all but vanished after the nation's biggest retailers said their business continued to deteriorate in October. Several companies including Sears, Roebuck & Co. and J.C. Penney Co. Inc. reported Thursday that their sales dropped from levels of a year earlier as consumers, preoccupied with concerns about the economy and the Middle East, avoided buying anything they didn't need. The disappointing October sales followed poor showings in August and September, and with Christmas less than seven weeks away, retailers and the industry analysts who track their performance expect consumers to remain frugal during the holiday season. ``They'll probaby be going in and buying the same number of items, but they're not going to pay as much ...'' said Thomas Tashjian, an analyst with Seidler Amdec Securities Inc. in Los Angeles. ``They're not going to buy $100 electronic toys for their kids, not this year.'' Analysts said shoppers will be looking harder for bargains and waiting longer for price reductions than in past years. ``They're going to be busy spending fewer dollars,'' said Daniel Barry, an analyst with Kidder Peabody & Co. Consumers cut spending as the economy weakened and after the Iraqi invasion of Kuwait raised the specter of war, inflating prices of gasoline and home heating oil. The first items crossed off shopping lists were so-called discretionary items - clothing, furniture, home appliances and other extras that are the bread and butter of many big stores. If retailers have a difficult Christmas, it could contribute to a further deterioration of the economy, since two-thirds of the nation's economic growth is generated by consumer spending. Unsold goods on store shelves could also affect manufacturing - if stores don't place new orders, factories don't need to provide as many products and could lay off workers. And a poor Christmas season could be devastating for the retailers themselves, as they depend on holiday shopping for about half their annual sales and profits. Christmas 1989 was a disappointment for many storeowners after they were forced to slash prices to attract customers. Sears, the country's largest retailer, said October results from stores open at least one year fell 0.4 percent from a year earlier, while overall sales dropped 1.2 percent. Analysts believe sales from stores open at least a year - also known as same-store or comparable store sales - provide a more accurate assessment of a retailer's performance than overall sales do. New stores tend to have extraordinarily strong sales that can skew a retailer's results. One of the hardest hit last month was Penney, which said comparable store sales fell 6.3 percent from October 1989, while overall sales dropped 4.9 percent. Limited Inc., the nation's largest specialty apparel retailer, reported comparable store sales dropped 1 percent as overall sales rose 13 percent. Apparel stores were also affected by continuing warm weather in some parts of the country. May Department Stores Co., parent of big department store chains including Lord & Taylor, Hecht's, Filene's and Foley's, said comparable store sales dropped 4.4 percent, while overall sales edged up 1.1 percent. But Wal-Mart Stores Inc., one of the biggest discount retailers, continued to outperform the rest of the retail industry, reporting comparable store sales rose 10 percent while overall sales rose 25 percent. Analysts are already predicting trouble for some stores, especially those going into the Christmas season with high inventory levels and unexpectedly poor sales. These retailers are expected to be the first ones to mark down merchandise - and see their profits evaporate. Markdowns set off a spiral of sorts as consumers, having seen one round of price reductions, wait for more merchandise to be marked down and end up forcing retailers to take further cuts. When one retailer lowers prices, it pressures others to follow. Among other reports from retailers Thursday: -Dayton Hudson Corp. said comparable store sales rose 4.1 percent, while overall sales picked up 16.7 percent. -Kmart Corp. reported a 1.3 percent sales gain at comparable stores, and an 11.2 percent rise overall. -Woolworth Corp. said comparable store sales increased 1 percent, while overall sales rose 4.2 percent. The results announced Thursday differ from the monthly retail sales report from the government. The Commerce Department's figures includes sales from supermarkets, restaurants and car dealers.
