Retail sales suggest tepid holiday season

By Nicole Maestri

NEW YORK (Reuters) - More than half of U.S. retail chains posted October sales that fell short of Wall Street's heightened expectations, raising doubts about a widespread recovery for the holiday season.

Department store chains and teen retailers in particular disappointed investor expectations, while such disparate companies as apparel retailer Gap (GPS.N) and luxury store chain Saks Inc (SKS.N) performed better than hoped as consumers return to spending selectively.

"October results are not going to give investors the overall warm and fuzzy that we're on track for a strong Christmas," said Brean Murray, Carret & Co analyst Eric Beder, "It looks like we're on track for kind of a mediocre season right now based upon October."

Retail shares reflected the mixed results. Teen retailers Aeropostale (ARO.N) and American Eagle Outfitters (AEO.N) fell 13.6 percent and 12 percent, respectively. Mid-priced department store J.C. Penney (JCP.N) fell 6.5 percent, and Kohl's (KSS.N) shed 2.9 percent, while Saks gained 1.8 percent.

Industry forecasts for the holiday season range from a slight decline for retail sales to a slight increase, and many insiders say it is difficult to reach a firm prediction.

In the most bullish of forecasts to date, the International Council of Shopping Centers said on Thursday it expects retail same-store sales to rise 5 percent to 8 percent in November. It has forecast holiday same-store sales to rise 1 percent.

However America's Research Group founder Britt Beemer says total retail sales will most likely fall 2.9 percent during the season as a whole, according to a forecast issued on Thursday.

"I don't see anything out there that says October was an exciting month even with retailers advertising 60 percent off," he said.