Despite Easier Comparisons, June Retail Estimates Still Weak

Preliminary retail sales indicators for June show that teen clothing sales are the weakest sector. The Thomson Reuters Same Store Sales Index is expected to come in at -1.4% for June 2016, softer than June 2015’s 0.5% result. Excluding Gap, the apparel stores are expected to post the strongest June same-store sales.

Gap has the heaviest weighting in our apparel sector, and is looking at a -1.6% SSS estimate. It’s bringing down the whole group. Analysts polled by Thomson Reuters expect apparel as a whole (including Gap) to report a -1.2% SSS, compared to the 0.5% SSS recorded in June 2015.

However, excluding Gap, the Apparel group is set to post a 1.2% gain, still lower than the 2.5% result posted in June 2015.

L Brands has the strongest estimate in this group at 2.1%, below last year’s 3.0% SSS. On the flip side, teen retailers The Buckle and Zumiez have the weakest SSS estimates in the group at -9.5% and -6.0%, respectively.

June marks the second month of the retail industry’s second quarter. 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. June 2016 SSS Estimates

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

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

Source: I/B/E/S estimates