The weather is warming up, and mall traffic will likely pick up as shoppers venture out in search of everything from shorts and t-shirts for the summer months to patio furniture and lawn mowers. But retailers are already starting to see the impact of the seasonal shift in some robust same-store sales data. While the 3.6% forecast gain for May in the Thomson Reuters Same Store Sales Index is less than the 5.4% advance recorded in May 2011, it’s still a healthy number. Any reading north of 3% indicates that the U.S. consumer is healthy and willing to spend on trips to the malls and the forecast gain for May is a strong performance given the tough comparison with year-ago gains reported by retailers.

On the bright side, both Macy’s and Fred’s announced their same-store sales results earlier today, and beat analysts’ estimates by posting results of 4.2% and 1.3%, respectively. (Analysts had predicted that Macy’s would report a SSS gain of 4% in May, while same-store sales at Fred’s would remain unchanged.)”The momentum in our business continued in May … on top of a very strong month last year,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s. “Growth in May 2012 came from stores and online, and across geography and categories of business.” There is other good news for Fred’s investors: Thomson Reuters’ proprietary StarMine SmartEstimate score suggests that the company will report earnings of 17 cents a share in the second quarter, nearly a penny higher than analysts are currently projecting, giving the company a Predicted Surprise of 4.1%.

Seasonal factors are likely to play a role in determining final SSS results for May. This year, sales tied to Mother’s Day shifted into May from April last year. On the other hand, the cut-off date for most retailers when calculating May same-store sales results is May 26; that means sales from the final two day of the Memorial Day holiday weekend will end up being reported next month, which could in turn buoy June’s SSS results.

The apparel group appears likely to emerge as the outperformer for May – the first month of the second quarter for most retailers – followed by the discounters. Thanks to a mix of compelling fashions on their racks, attractive values and discounts, Zumiez, TJX Companies and Ross Stores seem likely to lead the way, with analysts surveyed by Thomson Reuters projecting that their SSS will have increased by 6.6%, 5.3%, and 5.3% SSS, respectively, during May. Meanwhile, analysts expect the discount group to report a healthy 3.9% jump in same-store sales, with Costco leading the way with a 4.3% projected gain. The latter profited from gasoline sales throughout the month and especially during Memorial Day weekend; removing those from the calculation leaves the retailer with a forecast gain of 4.2% in SSS for the month.

Still, the discount sector’s projected SSS gains in May will fall short of the 7.8% surge in sales the group recorded in May 2011; even the leader, Costco, failed to measure up to its 13% jump in SSS for May 2011. Analysts expect SSS at Target to rise 3.5% for the current month.

Same-store sales within retailers in the Department store sector probably rose only 2.5% in May, analysts predict, down from the 5.5% gain recorded in May 2011. The most impressive gains in SSS come from upscale department store JW Nordstrom, which analysts forecast will report a 4.7% gain in SSS, and Macy’s, which, as noted above, just reported SSS that exceeded the 4% forecast gain (Both reported advances in SSS of 7.4% in May 2011.) Meanwhile, analysts predict that Saks will announce a 2.5% advance in SSS estimate and that Stage Stores will follow just behind with a 2.2% gain. Not all department stores will be celebrating, however: analysts expect Kohl’s to report that its same-store sales fell by 1.2% during May.

Apparel retailers fared well in May, analysts believe, as shoppers set out to overhaul their wardrobes for the summer. The group as a whole may report a 4.3% increase in same-store sales, a healthy advance over the lackluster 1.2% advance recorded in May 2011. Excluding Gap, one of the heaviest-weighted components in the sector, analysts believe the Apparel group’s gain will be closer to 4.7%, compared to the 3.4% increase in SSS reported last May. Off-price apparel retailers continue to attract bargain hunters, meaning that Ross and The TJX Companies, Inc. appear likely to deliver the strongest gains in SSS for May among apparel retailers: analysts are calling for both companies to announce a 5.3% jump in SSS. Once again, Limited Brands will benefit from its ownership of the Victoria’s Secret brand; the latter’s forecast 5.8% gain in SSS will help propel Limited’s company-wide same-store sales 4.7% higher in May, analysts say. Not all apparel retailers were able to keep up that pace, however: analysts are calling for Stein Mart to announce that its SSS were only 0.5% higher in May, compared to the 0.7% advance it announced in May 2011.

Apparel stores catering specifically to teens appear likely to be one of May’s weakest segments within the retail universe. Last year this group announced a 6.3% jump in SSS for May; this year, in contrast, we expect them to report a decline of 0.3% for the month of May. Wet Seal’s forecast 8.3% slump in same-store sales weighs on the sector. As always, however, there are exceptions to the rule: we believe Zumiez may post a 6.6% jump in SSS. Likewise, analysts are calling for The Buckle to report SSS that are 3.3% higher than a year ago. While that gain is less than the 8.8% jump in SSS it announced last May, it’s still a healthy advance.

Economists expect that the next monthly jobs market report from the Department of Labor – due out this Friday – will show that the unemployment rate remained unchanged at 8.1% in May. This sign of stability in the labor market could help boost consumer confidence – and thus retail sales — and generate further economic growth as we move into summer.

For more insight into analysts’ changing views of May Same Store Sales, see this interview with analyst Jharonne Martis.

 
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