October Retail Sales Seen Benefiting from Easy Comparisons

The monthly reporting retailers are expected to show continued signs of struggle in October, but same store sales (SSS) are at least benefiting from comparisons with even lower numbers a year ago.

The Thomson Reuters Same Store Sales Index is expected to show a 1.1% gain for October 2016, an improvement from October 2015’s -0.4% result. An increase of 3% or more indicates a healthy retail industry. This October, the Discount sector is expected to post the strongest SSS growth, while the teen index is hurting the most.

Gap has the heaviest weighting in our apparel sector, and is bringing the overall group down with a -1.5% SSS estimate. Still, its Old Navy division continues to outperform the other divisions and is expected to register a 3.7% SSS.

Analysts polled by Thomson Reuters expect the Apparel sector as a whole to report a -0.7% SSS, compared to the 0.7% SSS recorded in October 2015. Meanwhile, L Brands has the strongest estimate in this group at 1.7%, below well below last year’s 5.0% SSS. Victoria Secret’s -0.4% SSS estimate brings the sector down as it continues to struggle transitioning its merchandise.

Among teen retailers, The Buckle has the weakest October SSS estimates at -14.3%, while Zumiez has the strongest at 3.0%.

October marks the last 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 Q3 (vs. 1.4% in Q3 2015).

Exhibit 1.  October 2016 SSS estimates

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

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

Source: I/B/E/S Estimates

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