Difficult March Comparisons Were Too High For Retailers To Beat

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Includes: BITE, COST, FDIS, FXD, GPS, LB, PMR, RCD, RETL, RTH, VCR, XLY, XRT, ZUMZ
by: Lipper Alpha Insight

Despite initial estimates, an early Easter didn't help the retail industry much in March. The Thomson Reuters Same-Store Sales (SSS) Index registered a -0.1% comp for March, missing its 0.8% final SSS estimate.

Only one retailer beat its SSS estimate, while Gap's (NYSE:GPS) weaker-than-expected result brought the apparel group down. This year's Easter holiday (March 27) occurred a week earlier than it did in 2015. Usually, the arrival of Easter kicks off spring retail purchases, but this year it wasn't enough to help store chains offset the impact of particularly tough year-over-year comparisons.

The usual winner, L Brands (NYSE:LB), was the only retailer to beat its 2.0% Mar. SSS estimate, with a 3.0% SSS result. The retailer was facing difficult comparisons from a year ago, when it posted a robust 9.0% SSS result. This year it received a boost from its Bath & Body Works division 5.0% SSS result, followed by Victoria's Secret 2.0% SSS result. The Buckle registered the weakest result in our retail universe at -11.8%, followed by Zumiez' (NASDAQ:ZUMZ) -7.8% SSS result. Likewise, Gap reported a -6.0% SSS. Its sales were hurt by its Banana Republic division which came in at -14.0% SSS. Costco (NASDAQ:COST) has the biggest weighting in our index and posted a 1.0% SSS, and is being hurt by lower gasoline prices. Excluding gas, Costco posted a robust 4.0% SSS.

March marks the second month of Q1 2015. The Thomson Reuters Quarterly Same-Store Sales Index, which consists of 80 retailers, is expected to post 1.4% growth for Q1 (vs. 1.6% in Q1 2015).

Exhibit 1. Performance - Overall and Compared to Expectations

Source: Thomson Reuters I/B/E/S estimates