October Sales Results Dismay Retailers

The outlook for the Christmas shopping season worsened today as the nation’s biggest retailers reported dismal sales results during October. Consumers, with one eye on the economy and the other on the Middle East, are expected to buy fewer and cheaper gifts this year.

Several major companies, including J. C. Penney Co. Inc., May Department Stores Co. and Limited Inc., reported their sales dropped from year-earlier levels.

The results, coming on the heels of poor showings in August and September, “reflected a recessionary psychology” among consumers, said Jeffrey Feiner, a retail industry analyst with Merrill Lynch & Co. “We expect the weakness will continue.”

Jeffrey Edelman, an analyst with Barclays de Zoete Wedd Inc., was equally downbeat, predicting, “We’re undoubtedly going to see a continued winding down of the consumer” into the Christmas season.

Consumers have put spending for discretionary items--clothing, furniture and other extras--on hold the last few months. They also have less money to spend because they are paying more money for gasoline and heating oil.

Analysts said consumers will be shopping carefully and looking for bargains. With merchandise not moving out of the stores the last few months, the bargains are already there as retailers take markdowns in hopes of reducing inventories.

A poor Christmas is bad news for the economy, since two-thirds of the gross national product is generated from consumer spending.

A bad season could also be devastating for retailers, who depend on holiday shopping for about half their annual sales and profits.