Predictions Are for Modest Growth in Same-Store Sales in September After August’s Surprise Gains
Analysts forecast a modest 1.6% gain in SSS for September; although excluding the impact of drugstores raises that forecast to a more respectable 3.6%, the pace of growth is expected to slow from August’s back-to-school surge.
In the wake of an unexpectedly robust 6.1% jump in same-store sales for August (excluding the results of drug stores), analysts currently are expecting that the Thomson Reuters Same Store Sales Index will rise at a reasonably robust pace of 3.6%. Factoring the drug stores’ results into the equation, however, means that gain will likely fall to only 1.6% — levels that are well below the 6.4% gain recorded in September 2011 (excluding drugstores) and a total advance of 5.5% that includes the drug stores’ results.
Once again, analysts are expecting apparel retailers to lead the way, as cooler weather in September drove demand for sweaters, coats and other seasonal merchandise, and teenagers flocked to the malls in search of the latest trends after eyeing their classmates’ new fall wardrobes in the first days of school. Zumiez (ZUMZ.O), a teen retailer that posted disappointing SSS figures for August, has already reported its same-store sales results for September, and beat expectations by posting a 5.6% jump in SSS for September. The Apparel sector as a whole is likely to report a 4.3% advance in SSS, compared to the 2.9% increase recorded in September 2011. But these gains are likely to be narrow. Analysts expect The Limited, for instance, to post a 4.3% gain in SSS during the period, largely due to the strength in its Victoria’s Secret Division. Gap, (GPS.N) one of the heaviest-weighted components in the sector, is also expected to be among its top performers, and to report a 5.4% gain in SSS, a dramatic turnaround from the year-ago period during I announced a 4% decline. But once the Gap is removed from the Apparel group’s calculations, the picture looks more bleak, with analysts forecasting SSS will be lower at only 3.9%, well below the 5.7% advance in SSS reported for September 2011.
Teenagers may be shopping, but they aren’t spending enough to help out SSS results at those retailers catering specifically to their demographic. Analysts expect Wet Seal’s (WTSLA.O) performance to weigh on the sector; analysts expect it to announce a 15.5% slump in SSS. Same-store sales for Buckle Inc. (BKE.N) are expected to climb only 1%, compared to its 10.3% gain last September.
The upbeat news expected from the Gap is likely to carry over into its third-quarter earnings, with analysts polled by StarMine predicting that the company will beat the consensus earnings estimate; the StarMine SmartEstimate today is nearly 2 cents above the estimate. Conversely, Wet Seal’s performance is likely to prove a drag on the company’s earnings.
Some retailers turned to novel marketing techniques to boost same-store sales in the crucial back-to-school shopping season. Target (TGT.N) introduced its first “shoppable” short film, featuring celebrities wearing the retailer’s fall fashion line. Shoppers can watch “Falling for You” on Target’s website, and click through to order any of the items they see. Analysts expect Target to report a 2.1% gain in SSS in September, down from last year’s 5.3% advance.
One factor weighing on retailers at present is the ongoing gnawing uncertainty surrounding the U.S. job market. The Labor Department is set to release its much-scrutinized monthly data at the end of this week, and economists predict that the unemployment rate will edge slightly higher, back to 8.2% from 8.1%. To the extent that this makes consumers more anxious, they may well curtail their spending; such restraint would be bad news for the economy, as consumer spending accounts for two-thirds of U.S. GDP.
The final SSS data for September will be available at the end of the week.
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