by Jharonne Martis.
The December holiday season is always a bellwether for the retail industry and this year looks like good news. The Thomson Reuters Same Store Sales Index (SSS) is expected to register a 1.8% gain for December 2016, the strongest SSS for 2016, and an improvement from December 2015’s 0.7% result. The discount sector is expected to post the strongest SSS growth in December, while the teen index is hurting the most.
Gap has the heaviest weighting in our apparel sector. It is expected to bring the overall group down with a flat SSS estimate, but its Old Navy division continues to outperform the other divisions and is expected to register a 3.0% SSS. Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a -0.1% SSS, compared to the flat SSS recorded in December 2015. L Brands has the strongest estimate in this group at 0.6%, but well below last year’s 8.0% SSS. Victoria Secret’s -1.3% SSS estimate brings L Brand’s SSS down as it continues to struggle with transitioning its merchandise. Meanwhile, teen retailer The Buckle has the weakest December SSS estimate at -16.0%.
December marks the second month of the retail industry’s fourth quarter. Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.0% growth for Q4 (vs. 1.4% in Q4 2015).
Exhibit 1. December 2016 SSS estimates
Source: I/B/E/S estimates. Note: Aggregate mean data is revenue weighted.
Exhibit 2. Costco on Top; The Buckle Expected to Post Weakest SSS