March 1, 2016

February Retail Sales Seen as Weak, Despite Clearance Sales

by Jharonne Martis

The American retail shopper still isn’t in a free-spending mood. The Thomson Reuters Same Store Sales (SSS) Index forecast for February 2016 indicates a small gain of 0.5%. Excluding the drug store sector, the SSS growth rate is expected to fall to an estimate 0.3%.

A year ago, the final February SSS index registered a much healthier gain of 1.2% and the ex-drug indicator was up 0.6%. However, a 3.0% increase is considered a sign of a robust retail economy.

At least the SSS index is expected to be in positive territory, compared to January’s negative results, partly thanks to an improvement in winter weather.

While retailers have been clearing excess fourth quarter inventory at sale prices, they have also been introducing fresh new spring merchandise ahead of the early Easter (March 27), which they hope to sell at full price.

Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a 0.8% SSS, compared to the -0.2% SSS recorded in February 2015. Excluding Gap, one of the heaviest-weighted components in the sector, apparel is set to improve at 3.7%, below the 4.2% result posted in February 2015. L Brands has the strongest estimate in this group at 4.5%. On the flip side, teen retailers The Buckle and Zumiez have the weakest SSS estimates in the group at -5.5% SSS and -5.2%, respectively.

February marks the first month of the retail industry’s first quarter and a significant number of companies have issued negative guidance for the period. Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.5% growth for Q1 (vs. 1.6% in Q1 2015).

Exhibit 1. February 2015 SSS estimates


Source: Thomson Reuters I/B/E/S estimates.  Note: Aggregate mean data is revenue weighted.

Exhibit 2.  Cato Corp. is on Top, While Buckle Is Expected to Post the Weakest February SSS


Source: Thomson Reuters I/B/E/S estimates


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