Retail Winners & Losers: PacSun, Buckle

NEW YORK (TheStreet) -- Retail shares rallied on Tuesday, as October sales are starting off with a bang.

Sales for the first full week of October inched up 0.6%, and on a year-over-year basis rose 1%, according to the International Council of Shopping Centers and Goldman Sachs.

"Slowly, but surely, the underlying sales performance is inching higher," Michael P. Niemira, ICSC chief economist said in a statement. "The trend improvement is providing evidence that the retail sector recovery is starting to unfold."

ICSC expects sales for the month to be flat, with some upside potential.

The S&P Retail Index ended the day up 0.9% to 391.23, led by Pacific Sunwear of California(PSUN Quote).

The teen retailer was upgraded to outperform by FBR Capital Markets analyst Adrienne Tennant, who said better product focus and easier year-ago comparisons could be appealing for long-term investors.

Shares of Pacific Sunwear spiked 5.5% to close at $6.48.

Macy's(M Quote) also inched up 0.6% to $19.74 after an analyst raised his price target and earnings estimates.

JP Morgan analyst Charles Grom expects the department store to reports third-quarter loss between 3 cents and 5 cents a share, up from his prior forecast of a loss of 9 cents. He also raised his price target to $19 from $17.

He attributed his more optimistic outlook to the company's better-than-expected September same-store sales. Macy's posted a 2.3% slip during the month, surpassing the 4.6% decline analysts expected.