March Retail Sales Seen Benefiting From Early Easter

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Includes: RETL, RTH, VCR, XLY, XRT
by: Lipper Alpha Insight

By Jharonne Martis

Easter Sunday fell on March 27th this year - early in the season - and that is expected to demonstrate a beneficial effect on retail sales figures for the month. The Thomson Reuters Same-Store Sales Index (SSS) forecast for March 2015 indicates a gain of 1.5%, better than the actual 1.0% increase a year ago. Excluding the drugstore sector, the SSS growth rate falls to a 0.8% estimate; this is stronger than the 0.1% ex-drug result recorded in March 2015.

Easter fell in April last year, so the beginning of this year's spring shopping arrived in March, expecting to benefit same-store sales. Demand for the latest fashion trends is always strong in the weeks leading up to Easter, a time when retailers are still selling the season's must-have items at full price.

Gap (NYSE:GPS) has the heaviest weighting in our apparel sector, and is bringing the overall group down with a -4.3% SSS estimates. Analysts polled by Thomson Reuters expect the apparel sector as a whole to report a -2.0% SSS, compared to the 4.9% SSS recorded in March 2015. Excluding Gap, one of the heaviest-weighted components in the sector, apparel is set to improve at 1.1%, below the 8.6% result posted in March 2015. L Brands (NYSE:LB) has the strongest estimate in this group at 2.0%. On the flip side, teen retailers The Buckle (NYSE:BKE) and Zumiez (NASDAQ:ZUMZ) have the weakest SSS estimates in the group at -6.7% and -5.3%, respectively.

March marks the second month of the retail industry's first quarter and we have received a significant amount of negative guidance for that period. Consequently, analysts have been lowering first quarter comp estimates. Our 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. March 2016 SSS estimates

Source: Thomson Reuters I/B/E/S estimates. Note: Aggregate mean data is revenue weighted.

Exhibit 2. Rite Aid (NYSE:RAD) is on Top, While The Buckle Is Expected to Post the Weakest SSS

Top 3

Bottom 3

RAD

Rite Aid

4.3%

BKE

The Buckle

-6.7%

FRED

Fred's

2.3%

ZUMZ

Zumiez

-5.3%

LB

L Brands

2.0%

GPS

Gap

-4.3%

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