February to February, weather affected retail sales in 2014 and 2015, but lower gasoline prices in 2015 also proved to be a key factor. The Same Store Sales Index forecast for February 2015 calls for a gain of 2.1%, stronger than the actual increase of 0.6% in 2014. Excluding the drugstore sector, the February 2015 SSS growth rate is expected to hit 1.5%, above the 0.3% result recorded a year ago.
Giant snowstorms this year competed with the polar vortex last year, but significantly cheaper gasoline in 2015 sent shoppers to their cars, headed for the malls. Retailers are facing easy comparisons from a year ago, still, February comps seem modest and are forecast to come in below the 3% gain seen as healthy.
February marks the first month of the retail industry’s first quarter and things look brighter this year for that period. Overall, analysts believe that lower gas prices and the improvement in the job market will benefit the retail sector as a whole. Our Quarterly Same Store Sales Index, which consists of 75 retailers, is expected to post 2.1% growth for Q1 (vs. 0.6% in Q1 2014).
Looking at major store chains, L Brands has the highest SSS estimate for February at 4.7% vs. 2.0% SSS reported in February 2014. Costco, L Brands and Zumiez are facing the most difficult year-ago SSS comparison in the retail universe at 2.0%. On the flip side, The Buckle has the weakest SSS estimate at 0.1%.
Exhibit 1. February 2015 SSS estimates
Source: I/B/E/S estimates. Note: Aggregate mean data is revenue weighted.
Discounters, apparel stores struggling
The Discount sector has a 0.9% SSS estimate, below the 1.9% pace set in February 2014. Costco has a 0.9% comp estimate in the group, below its 2.0% February 2014 result. This discounter is negatively affected by foreign exchange rates. Excluding the impact of gasoline sales, the Costco SSS figure rises significantly to 7.3%. Meanwhile, Fred’s has a 2.3% SSS estimate vs. a -2.2% posted in February 2014.
The Apparel sector is facing easier comparisons from a year ago. Analysts expect the sector as a whole to report a 2.7% gain in SSS, compared to the 3.2% decline in SSS recorded in February 2014. Excluding Gap, one of the heaviest-weighted components in the sector, the Apparel group is set to improve at 4.3%, above the 1.3% result posted in February 2014. L Brands and Stein Mart have the strongest estimates in this group at 4.7%, and 3.0% SSS estimate. Meanwhile, Gap is expected to post the weakest result in the group at 1.4% SSS, while facing an easy -7.0% sales comparison from 2014. Its Gap Global division is expected to post the weakest SSS at -1.4% for February 2014. On the flip side, its Old Navy Global division has a 5.1% SSS estimate.
Apparel stores catering specifically to teens appear likely to be February’s strongest segment within the retail universe. Same store sales are expected to post a 1.7% comp for the sector. Zumiez and The Buckle are facing easier comparisons from last year and are expected to post comps of 4.3% SSS, and 0.1% SSS respectively.
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