Retail Sales Miss Estimates for Second Straight Month

February was no improvement on a slow January for the retail sales sector. The Thomson Reuters Same Store Sales (SSS) Index posted a 0.0% gain, missing its final 0.5% estimate. Excluding drug stores, the index registered a 0.2% comp for February, missing its 0.3% final estimate.

These results are not final as Zumiez will report February SSS on March 10. Only one retailer beat its SSS estimate, while Gap’s weaker-than-expected result brought the apparel group down. Still, Easter falls earlier, on March 27 this year. Sales are expected to improve as the weather continues to warm up, and shoppers buy new spring merchandise ahead of the holiday.

The usual winner, L Brands, was the only retailer to beat its 4.5% Feb SSS estimate, with a 5.0% result. The retailer received a boost from its Bath & Body Works division 9.0% SSS result, followed by Victoria’s Secret 4.0% SSS result. The Buckle registered the weakest result in our retail universe at -8.9%, followed by Gap’s -2.0% SSS result. Gap sales were hurt by its Banana Republic division which came in at -11.0% SSS. Costco has the biggest weighting in our index, and posted a flat SSS, hurt by lower-priced gasoline sales. Excluding gas, Costco posted a robust 4.0% SSS.

February marks the first month of Q1 2016 for retailers. The Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.5% growth for Q1 (vs. 1.6% in Q1 2015).

Exhibit 1. Performance — Overall and Compared to Expectations

Source: I/B/E/S estimates

Exhibit 2.  Beat — Met — Missed

Source: I/B/E/S estimates