NEW YORK (Bloomberg) — US retailers’ sales rose in October as cooler-than-normal weather spurred demand for clothes and falling gasoline prices freed up discretionary income. Department stores outpaced discounters.Federated Department Stores Inc., J.C. Penney Co. and Nordstrom Inc. all reported sales that exceeded analysts’ estimates today. Wal-Mart Stores Inc., the world’s largest retailer, said sales at stores open at least a year grew 0.5 percent, and it forecast unchanged sales for November.

October sales at 54 chains surveyed by the International Council of Shopping Centers rose three percent. Unusually low temperatures helped boost demand for heavier clothing such as shearling and fur-trimmed coats.

While growth has slowed from September, the results bode well for third-quarter earnings and holiday spending, analysts said.

“The overall back-to-school season and leading up to the holiday, retailers have been surprisingly strong,” said Sarah Henry, an analyst with Berwyn, Pennsylvania-based Sovereign Asset Management, which manages $1.5 billion in assets.

“A lot of it has to do with cool weather.”

Overall, retail sales rose 3 percent, the International Council of Shopping Centers said, citing results of 54 chains.

Wal-Mart’s shares fell 43 cents to $48.85 yesterday in New York Stock Exchange composite trading. Target decreased $1.48, or 2.5 percent, to $57.70. The Standard & Poor’s 500 Retailing Index of 28 companies fell 1.3 percent to 493.68.

The gauge has risen eight percent in 2006, trailing the 9.6 percent advance in the S&P 500.

October’s average low temperature was 46 degrees Fahrenheit, three degrees lower than a year earlier, making it the third coldest October in ten years, according to Planalytics, a Wayne, Pennsylvania-based weather-consulting firm.

Consumers cited weather as the primary reason for buying clothing, according to an ICSC survey conducted in late October.

The month’s wet and cold weather benefited department stores over stand-alone retail outlets, wrote Bethlehem, Pennsylvania-based Weather Trends International, another weather-consulting firm.

Wal-Mart, the world’s largest retailer, blamed its smallest gain since a similar increase in August 2004 on weak demand for new, more fashionable clothing and disruption from store remodelling. The Bentonville, Arkansas-based company previously forecast a two percent to four percent rise.

Because Wal-Mart’s results were “company-specific in nature,” the drag on the overall sales number should be factored out, Ken Perkins, an analyst with Retail Metrics LLC in Swampscott, Massachusetts, wrote in a report yesterday.

Federated, the second-biggest US department store operator, said sales increased 7.7 percent, more than analysts’ estimates for a 6.1 percent gain. Its Macy’s and Bloomingdale’s stores gained while former May Department Store Co. stores, converted to the Macy’s name in September, trailed.

The Cincinnati-based retailer forecast a sales increase of 3 percent to 5 percent for November and the fourth quarter.

J.C. Penney Co., the third-biggest department store, said sales gained 8.1 percent, higher than average estimate of 5.5 percent. J.C. Penney, based in Plano, Texas, cited demand for apparel and accessories.

It said third-quarter profit would be $1.22 a share, up from a previous forecast of $1.11, and it projected November sales in the “low single digits.”

Seattle-based Nordstrom Inc. posted a 10.7 percent increase, almost double analysts’ estimate for a 5.7 percent gain.

Saks Inc., based in Birmingham, Alabama, had a 9.2 percent increase, more than twice analysts’ estimates.

The same-store sales gain for retailers in October is smaller than the 3.9 percent average monthly increase this year through September, and a 4.4 percent increase a year earlier, according to the ICSC, a New York-based trade group that tracks reports from as many as 75 companies.

Discretionary purchasing power improved as gasoline prices receded, ICSC chief economist Mike Niemira said. The average price of a gallon of gasoline in the week ended October 30 was $2.22, down 11 percent from a year earlier, according to the US Energy Department.

Tight inventories will help retailer profitability by reducing the need for markdowns to generate sales, said Sovereign Asset Management’s Henry, whose firm holds Wal-Mart shares.

The holiday season accounts for a fifth of US retailers’ sales and is the most profitable period for many.

Stores will have a 5 percent gain in total holiday sales, smaller than last year’s 6.1 percent rise, the National Retail Federation forecast on September 19.