Retailers Looking at Three Straight Months of Negative Comps

There’s no relief in sight for the retail industry as preliminary figures indicate a same store sales decline in May, which would be the third straight month of negative results.

The Thomson Reuters Same Store Sales Index is expected to come in at -0.6% for May 2016, even weaker than May 2015’s 0.4% result.

The discounters are expected to post the strongest May same-store sales. This group is also benefiting from easier comparisons from a year ago. However, clothing is another story.

Gap has the heaviest weighting in our apparel sector, and is bringing the overall group down with a -7.0% SSS estimate. Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a -5.1% SSS, compared to the 1.3% SSS recorded in May 2015. Excluding Gap, the apparel group is set to improve at -2.6%, below the 4.3% result posted in May 2015.

Cato Corp. has the strongest estimate in this group at 1.0%. On the flip side, L Brands’ Victoria Secret is bringing its parent’s comps down to a -2.2%, below last year’s 5.0% SSS. This would mark the second straight month of negative comps for Victoria’s Secret. Likewise, teen retailers The Buckle and Zumiez have the weakest SSS estimates in the group at -13.3% and -5.8%, respectively.

May marks the first month of the retail industry’s second quarter and we have received a significant amount of negative guidance for the period. Our 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).

Exhibit 1.  May 2016 SSS estimates

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

Exhibit 2.  Costco is on Top, While The Buckle Is Expected to Post the Weakest SSS

Source: I/B/E/S estimates