Retailers Miss Easy April SSS Comparisons

In retail sales, comparisons to the previous year loom large, in a season-to-season cycle. Despite initial indications that sales in April 2016 would benefit by comparison to relatively weak numbers in 2015, that did not turn out to be the case.

The Thomson Reuters Same Store Sales Index registered a 0.1% gain for April, missing its 1.4% final SSS estimate. These results are not final, however, as Gap will report April SSS on May 9. Gap is expected to post a 0.5% SSS vs. -12.0% last year. Meanwhile, all the other retailers missed their April SSS estimates, despite being easy.

The usual winner, L Brands, registered a 1.0% SSS result, which was below its 4.8% SSS estimate. The retailer received a hit from its Victoria Secret division’s -1.0% SSS result, and gave May SSS guidance of a flat SSS. These factors drove the stock down on May 5. Meanwhile, Costco has the biggest weighting in our index, and posted a flat SSS, and is being hurt by low gasoline prices. Excluding gas, Costco posted a robust 3.0% SSS. The Buckle registered the weakest result in our retail universe at -13.2%, followed by Zumiez, with a -6.0% SSS result.

April marks the last month of Q1 2016. The Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.4% growth for Q1 (vs. 1.6% in Q1 2015).

Exhibit 1.  Performance — Overall and Compared to Expectations

Source: I/B/E/S estimates

Exhibit 2.  Beat — Met — Missed

Source: I/B/E/S estimates