U.S. Retail Sales Still Weak into the Fall Season

The back to school season hasn’t generated much excitement at the retail counters. The Thomson Reuters Same Store Sales Index is expected to register a -0.3% result for September 2016, a decline from September 2015’s 0.8% result. The discount sector is the only group expected to see a positive growth in September, while teen retailers are hurting the worst.

Gap has the heaviest weighting in our apparel sector, and is bringing the overall group down with a -2.9% SSS estimate. Still, its Old Navy division is receiving some boost from back to school sales and is expected to register a 1.3% SSS.

Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a -2.0% SSS, compared to the 2.6% SSS recorded in September 2015. Meanwhile, L Brands has the strongest estimate in this group at 0.1%, well below last year’s 9.0% SSS. Victoria Secret’s -1.8% SSS estimate brings the sector down as it continues to struggle transitioning its merchandise. Similarly, teen retailers The Buckle and Zumiez have the weakest September SSS estimates, at -11.0%, and -1.0%, respectively.

September marks the second month of the retail industry’s third quarter. Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.1% growth for 3Q (vs. 1.4% in 3Q 2015).

Exhibit 1.  September 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