December 4, 2015

Cool Weather Fails To Warm Up November Retail Sales

by Jharonne Martis

Cool – but still balmy – weather in November was one of the factors keeping retail sales sluggish, according to the Thomson Reuters Same Store Sales (SSS) Index.

The indicator registered a -0.4% result for the month. The only bright spot was that it beat an even lower initial estimate of -0.8%. Excluding drug stores, the index improved a little compared to its initial estimate, but was still down by -0.7%, beating the estimate of -1.4%.

A year ago, retail sales were healthier, so beating those comparisons was tough, with 56% of retailers missing estimates. They also saw slower store traffic as online deals stole Black Friday sales. Others also blamed lower gasoline prices, foreign exchange differences, and warmer-than-usual weather.

Zumiez registered the weakest result in our retail universe at -13.8%, followed by Gap’s -8.0% SSS result which came in below its -6.3% final estimate. Gap was one of the vendors that decided to reduce its store hours on Thanksgiving.

Despite facing the most difficult SSS comparison from a year-ago, L Brands was the clear winner for November, with a 7.0% SSS result, speeding past expectations of a 3.0% gain. Its Bath & Body Works division was the strongest performing group at 7.0%, followed by Victoria Secret at 6.0%. Both divisions are also poised for robust growth in December as their merchandise continues to resonate well with customers.

Costco has the biggest weighting in our index, and posted a flat SSS, and is being hurt by lower-priced gasoline sales. Excluding gas, Costco posted a robust 6.0% SSS.

Looking forward to Q4, our Thomson Reuters Quarterly Same Store Sales Index, which consists of 83 retailers, is expected to post 1.3% growth for Q4 (vs. 2.8% in Q4 2014).

Exhibit 1.  Performance — Overall and Compared to Expectations


Weak results across the board

Costco has the biggest weighting in the Discount sector, and its flat SSS (still better than its -0.8% final estimate) brought the overall sector down. Excluding gasoline sales, Costco’s SSS improves to a robust 6.0%, above expectations of 4.9%. Meanwhile, Fred’s beat its 1.4% same store sales estimate with a 1.7% comp.

The Apparel sector registered a -2.4% SSS in November, slightly beating its final estimate of -2.6%. Cato Corp. beat its flat SSS with a 1.0% SSS result, while L Brands posted the strongest result at 7.0%. On the flip side, Gap’s Banana Republic’s -19.0% comp weighted on Gap’s -8.0% SSS result. Stein Mart also missed its flat SSS estimate and registered a -4.8% comp.

For November, the Teen Apparel sector was November’s weakest segment within the retail universe. The sector registered a -10.1% SSS for November, below its -6.8% final estimate. The Buckle missed its final estimate of -6.5%, and reported a -7.9% comp. Meanwhile, Zumiez posted a -13.8% SSS, below its -7.3% final estimate.

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