May Retail Sales Are Still Hurting

American shoppers seem to be keeping those wallets closed this spring. The Thomson Reuters Same Store Sales Index registered a -1.1% comp for May, missing its -0.6% final SSS estimate. There were more than average downward surprises — 57% of retailers missed expectations. There weren’t any positive results, either.

It’s a measure of industry weakness that the discount group posted the strongest results with a flat SSS, below its 1.4% SSS final estimate.

Both Costco and L Brands came on top with a flat SSS result, followed by Fred’s -0.4% result. L Brands received a hit from its Victoria’s Secret division, which came in at -1.0% SSS, making it the second straight month it posted a negative SSS result. Meanwhile, Gap which has the biggest weighting in our apparel index, posted a -6.0% SSS, and is being hurt the most by Banana Republic, which saw a decline of 11% in SSS. The Buckle registered the weakest result in our retail universe at -11.0%, followed by Zumiez with a -7.6% SSS result.

May marks the last month of the industry’s Q2 2016. The Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 0.9% growth for Q2 (vs. 1.4% in Q2 2015). It’s worth noting that a 3% gain is considered a sign of a healthy retail sector.

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