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October 9, 2015

Late Labor Day Weekend Drove Shoppers To The Malls

by Jharonne Martis.

Despite gloomy initial estimates, the retail sector managed to do a little better in September, with the actual Thomson Reuters Same Store Sales Index showing a 0.9% gain, beating its 0.2% final estimate. Excluding the drug store sector, the Same Store Sales Index rose 0.8% in September, also outpacing its final estimate of -0.1%.

Overall, 75% of retailers beat estimates. A later Labor Day weekend inspired shoppers and back-to-school sales picked up in the beginning of September, right as school started.

Once again, L Brands was the clear winner for September. The retailer smashed expectations of 4.1% with a 9.0% SSS result. Its Victoria Secret division was the strongest at 9.0%, followed by its Bath & Body Works division’s 8.0% SSS result – 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 gasoline sales. Excluding gas, Costco posted a robust 8.0% SSS, above last year’s 6.0% SSS result. On the flip side, The Buckle posted a -6.7% SSS

Looking forward to Q3, our Thomson Reuters Quarterly Same Store Sales Index, which consists of 83 retailers, is expected to post 1.6% growth for Q3 (vs. 1.7% in Q3 2014).

Exhibit 1. Performance — Overall and Compared to Expectations

Sector breakdown

Costco has the biggest weighting in the Discount sector, and its flat SSS brought the overall sector down. Consequently, the Discount sector posted a 0.1% SSS, above its -0.4% final estimate. Excluding gasoline sales, Costco’s SSS improves to a robust 8.0%, above expectations. Similarly, Fred’s beat its 1.2% same store sales estimate, with a 4.2% comp.

The Apparel sector registered a 2.3% SSS in September, beating its final estimate of 0.5%. Gap beat its -1.3% SSS estimate and posted a -1.0% SSS. On the flip side, Stein Mart posted a -2.8% comp, below its -2.0% SSS estimate. Meanwhile, L Brands posted the strongest result in our retail universe at 9.0%, followed by Cato Corp at 2.0%.

For September, Teen Apparel was the weakest segment within the retail universe. The sector registered a -4.8% SSS for September, below its -3.2% final estimate. The Buckle missed its final estimate of -1.0%, and reported a -6.7% comp. Meanwhile, Zumiez posted a -1.8% SSS, above its -6.9% final estimate.

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