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January 6, 2016

Warm Weather Continues to Cool Holiday Sales

by Jharonne Martis.

It was a green and brown Christmas, as warm temperatures for most of December saw people running in t-shirts in many parts of the country. As a result, winter-related merchandise continued to pile up at retail stores and inventory levels remained consistent with our initial outlook. The Thomson Reuters Same Store Sales Index is expected to show 0% growth for December 2015, both overall and excluding the drug store sector. This is much weaker than the 2.8% ex-drug gain and overall growth of 3.3% recorded in December 2014.

Online sales were front and center this holiday season, underlying the importance of an omni-channel presence for retailers.

Analysts polled by Thomson Reuters expect the Apparel sector as a whole to report a -0.5% SSS, compared to the 2.5% gain in SSS recorded in December 2014. Excluding Gap, one of the heaviest-weighted components in the sector, Apparel is set to improve at 2.9%, below the 4.4% result posted in December 2014. L Brands has the strongest estimate in this group at 4.9%. On the flip side, Zumiez has the weakest SSS estimate in the group at -14.0% SSS vs. 8.0% comparison from 2014. Likewise, Gap has a -3.5% SSS estimate. Its Banana Republic Global division is expected to post the weakest SSS at -13.4% for December 2014. Similarly, its Old Navy Global division has a -0.2% SSS estimate. Meanwhile, both Stein Mart and Cato Corp. are both expected to post flat comps in the group.

Meanwhile, our Thomson Reuters Quarterly Same Store Sales Index, which consists of 83 retailers, is projected to post a 1.1% growth for Q4, below last year’s 2.8% SSS growth, suggesting that holiday sales will be weaker than 2014.

Exhibt 1. December 2015 SSS estimates


Source: I/B/E/S estimates. Note: Aggregate mean data is revenue weighted

Exhibit 2. L Brands is on top. Zumiez shows weakness.


Source: I/B/E/S estimates

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