Discounts drive retail sales increase

The International Council of Shopping Centers said yesterday that revenue rose 5.5 percent in September, with several retailers including Target, Limited Brands , and Kohl’s posting strong gains as consumers snagged discounted merchandise.

The revenue increases, which beat Wall Street estimates, leave uncertainty about whether retailers will have to offer more bargains to lure consumers during the winter holiday shopping season. Retailers can make up to 40 percent of their annual revenue during the period, which runs from November through December.

“This past month shows consumers are rewarding retailers who are matching great merchandise with great deals - a clear signal to expect more and earlier promotions as we enter the holiday season,’’ said Sherif Mityas, a partner in the retail practice at A.T. Kearney, a global management consulting firm.

The revenue gains at stores open at least a year - a key indicator of a retailer’s health - come as merchants look for a sign of how consumers will spend during the winter holiday season. Though many retailers reported better-than-expected results in September, concerns linger that shoppers who are fretting about high unemployment, a weak housing market and turbulent stock markets, will continue to seek out bargains that could significantly eat away at retailers’ profits.

For the holiday shopping period, the National Retail Federation, the nation’s largest retail trade group, expects sales to rise 2.8 percent to $465.6 billion. That would be smaller than the 5.2 percent increase during last year’s winter holidays, but slightly higher than the average increase of 2.6 percent for November and December over the past 10 years.

If September is any indication of what lies ahead for the winter holidays, though, retailers will probably have to offer a smorgasbord of deals in order to get Americans to buy. During the month, shoppers for the most part stuck to the frugal shopping habits they adopted during the Great Recession. And retailers offered huge discounts: The Gap chain cut the price of women’s pants from 40 percent to 60 percent, for example, while teen retailer Abercrombie & Fitch marked down sweat pants by 40 percent.

Kohl’s Corp., which suffered a sales decline in August, bounced back with a better-than-expected 4.1 percent gain in revenue at stores opened at least a year, in part because it stepped up discounting to lure shoppers. The department store also credited the sales bounce in part to its merchandising launch with celebrities Jennifer Lopez and Marc Anthony, the largest in its history.

Meanwhile, discounter Target Corp. reported a 5.3 percent revenue increase in September at stores open at least a year, marking the biggest increase monthly - excluding Easter month - since November 2007 when it recorded a 10.8 percent gain. Target said shoppers spent more in stores and more browsers were converted into buyers.

Results were buoyed by strong sales of groceries, beauty products and clothing. But Target also likely benefited from a surge in sales from its exclusive limited-time only Missoni by Target line of clothing, home furnishings, and other doodads made by the Italian designer. The exclusive version featured a variety of items from stationery to clothing and furniture at a fraction of the price of the original collection.

“We experienced strong sales results throughout the month and across a broad array of merchandise categories,’’ said Gregg Steinhafel, Target’s chief executive.