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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
c1

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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