September’s retail sales outlook isn’t much better than August’s. The Thomson Reuters Same Store Sales Index is forecast to gain just 0.2% – compared to 3.8% a year ago. Excluding drug stores, the SSS growth rate falls to -0.1%; this is also considerably weaker than the 3.5% ex-drug result recorded in September 2014.
Costco has the biggest weighting in our index, and is expected to post a -0.4% SSS. The weakness comes from foreign exchange rates, and the impact of gasoline sales. Excluding Costco, the SSS Index improves to a 0.9% growth rate.
Still, mall traffic picked up in September vs. August. Cool weather also helped boost demand for fall merchandise. However, mall traffic still remains weak compared to year-ago levels. Additionally, retailers are facing difficult comparisons. As a result, September SSS results are almost flat compared to a year-ago. Teen retailer Zumiez is expected to post the weakest SSS results at -6.8%. Another mall store that is suffering from weak sales is Gap with a -1.3% SSS estimate. Meanwhile, L Brands and Rite Aid are on top with a 4.2%, and 1.4% SSS estimates.
Looking at the quarter, our Thomson Reuters Quarterly Same Store Sales Index, which consists of 83 retailers, is projected to post a 1.6% growth for Q3, slightly below last year’s 1.7% SSS growth.
Source: I/B/E/S estimates. Note: Aggregate mean data is revenue weighted.
Sector by sector
The Discount sector is facing one of the most difficult comparisons from a year-ago. The group has a -0.4% SSS estimate, below the 3.9% pace set in September 2014. Costco has a
-0.4% comp estimate in the group, below its 4.0% September 2014 result. The discounter is negatively affected by foreign exchange rates among other factors. Excluding the impact of gasoline sales, the Costco SSS figure rises significantly to 6.6%. Meanwhile, Fred’s has a 1.2% SSS estimate vs. a 0.2% posted in September 2014.
Analysts expect the Apparel sector as a whole to report a 0.5% SSS, compared to the 2.6% gain in SSS recorded in September 2014. Excluding Gap, one of the heaviest-weighted components in the sector, the Apparel group is set to improve at 2.6%, below the 5.7% result posted in September 2014. Only L Brands has a positive estimate in this group at 4.2%. Meanwhile, Stein Mart and Cato Corp are both expected to post the weakest result in the group at -2.0% SSS, followed by Gap at -1.3% SSS vs. flat sales comparison from 2014. Its Gap Global division is expected to post the weakest SSS at -6.0% for September 2014. On the flip side, its Old Navy Global division has a 5.6% SSS estimate. Usually, Old Navy Global is Gap’s strongest during the back-to-school season.
Apparel stores catering specifically to teens have the weakest estimates within the retail universe. Same store sales are expected to post a -3.0% comp for the sector. The Buckle is facing an easy 2.2% comparison from a year-ago and is expected to post -0.6% SSS, while Zumiez is expected to post a -6.8% SSS.
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