Summer is in Full Swing and Retail Sales Look Dismal 

Looking at preliminary July retail numbers, it seems as if the American shopper is staying home, going to the beach or vacationing at the lake – anywhere but in a mall. The Thomson Reuters Same Store Sales Index is expected to come in at -0.9% for July 2016, a deceleration from July 2015’s -0.3% result. Weakness is evident across the board and the numbers are far below the 3% gain considered a sign of a healthy retail economy. Only one retailer is expected to post a positive SSS result.

Gap has the heaviest weighting in our apparel sector, and is bringing the overall group down with a -0.3% SSS estimate. Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a -0.2% SSS, compared to the -0.9% SSS recorded in July 2015. Meanwhile, L Brands has the strongest estimate in this group at 0.4%, below last year’s 3.0% SSS. Victoria Secret’s -0.6% SSS estimate brings the sector down as it continues to struggle transitioning its merchandise. Similarly, teen retailers The Buckle and Zumiez have the weakest July SSS estimates, both at -3.6%.

July marks the last month of the retail industry’s second quarter, and that isn’t looking very strong, either. Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.0% growth for Q2 (vs. 1.4% in Q2 2015).

Exhibit 1.  July 2016 SSS estimates

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

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

Source: I/B/E/S estimates