The nation's retailers saw their sales plummet to the weakest October level since at least 1969, with the financial crisis and mounting layoffs leaving consumers too scared to shop.

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NEW YORK — Nordstrom and Costco reported disappointing October sales today as the nation’s retailers saw their sales plummet to the weakest October level since at least 1969, with the financial crisis and mounting layoffs leaving consumers too scared to shop.

The stunning and rare drop, from an already weak September, is further darkening the outlook for the holiday season and raising more concerns about the financial health of the industry, which is not expected to see a recovery until at least the second half of 2009.

A number of stores, including J.C. Penney and Seattle-based Nordstrom, cut their profit outlooks as they slashed prices on everything from coats to holiday ornaments in a desperate bid to pull in shoppers. Analysts expect a do-or-die holiday season for more retailers, which have already seen competitors like Mervyns and Linens ‘N Things forced to liquidate.

Luxury stores reported steep declines in October as affluent shoppers cut back on designer clothing. Nordstrom’s 15.7 percent drop in same-store sales was worse than the 13.1 percent decline expected, and the company said it now expects that earnings for the third quarter will be slightly below its previously announced per-share profit outlook of 32 to 37 cents.

Even warehouse club operator Costco Wholesale, which sells items like TVs along with basics, posted disappointing results. The Issaquah-based company, hurt by currency effects, reported a 1 percent decline in October, below the 3.6 percent gain Wall Street projected.

Wal-Mart Stores, the world’s largest retailer, was among the few bright spots as it benefits from shoppers focusing on basics. The discounter plans to cut prices on thousands of items over the next seven weeks.

But most other stores suffered steep sales declines as consumers were spooked by shrinking retirement funds and volatile markets. The number of people continuing to receive jobless benefits reached its highest level in more than 25 years, according to government figures released today.

“Wal-Mart’s solid performance is reflective of the weakness in consumer spending,” said Ken Perkins, president of research company RetailMetrics. “As soon as the financial crisis hit, consumers spending dropped dramatically. … Consumer spending ground to a halt in October.”

Michael P. Niemira, chief economist at the International Council of Shopping Centers, described October’s performance as “awful.”

“This reflects the severity of the current financial crisis,” he said.

According to the ICSC-Goldman Sachs index, sales fell 1 percent, the weakest October performance since at least 1969 when the index began. That compares with a 1 percent gain in September and well below the 1.8 percent average pace so far this fiscal year, which for retailers begins in February.

Excluding Wal-Mart, the October sales number was down 4.6 percent. The index is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer’s health.

Wal-Mart posted a 2.4 percent gain in same-store sales, better than the 1.6 gain projected by analysts surveyed by Thomson Reuters. Including fuel sales, same-store sales rose 2.5 percent.

Target — which has lagged behind Wal-Mart because of its heavier emphasis on nonessentials — posted a 4.8 percent drop, worse than the 2.8 percent decline that analysts had expected.

“We expect the recent challenging sales environment to continue into the holiday season and beyond as a result of the economic factors currently affecting consumer spending,” Target’s President and Chief Executive Gregg Steinhafel said in a statement.

Among department stores, Penney reported a 13 percent drop in same-store sales at its department store business, worse than the 13.2 percent decline predicted. Macy’s reported a 6.3 percent drop for October. No estimate from Thomson Reuters was available.

Gap’s 16 percent drop was worse than the 11.1 percent decline Wall Street had forecast. The retailer reaffirmed its profit outlook for the third quarter, however, as it focused on inventory control. Limited Brands reported a 9 percent drop in October, a bigger decline than the 7.2 percent analysts were expecting.

Even teens stayed away from malls. American Eagle Outfitters reported a steeper-than-expected 12 percent drop in same-store sales, while Abercrombie & Fitch Co. had a 20 percent drop.