September Saw Positive Retail Surprises

| About: Consumer Discretionary (XLY)
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By Jharonne Martis

Final September retail numbers are indicating that the back to school fall season showed some life in certain sectors.

The Thomson Reuters Same Store Sales Index registered a 0.3% increase for September, beating its -0.3% final SSS estimate.

The positive surprises were led by apparel sellers Zumiez (NASDAQ:ZUMZ) and L Brands (NYSE:LB). After 17 months of negative SSS, Zumiez came in on top with a 6.3% SSS results, above its -1.0% final estimate. As a result, the retailer raised its third-quarter earnings guidance. L Brands also came in stronger than expected with a 3.0% SSS result. The company received a boost from its Bath and Body Works division's 9.0% gain, while its Victoria Secret's group posted a flat comp.

Among discounters, Costco (NASDAQ:COST) posted a better-than-expected 1.0% SSS.

Turning to the negative, teen retailer The Buckle (NYSE:BKE) registered the weakest result in our retail universe at -15.5%, followed by Cato Corp.'s (NYSE:CATO) -9.0% SSS result. Gap (NYSE:GPS) registered a weaker-than-expected -3.0% SSS, saying that sales were negatively hurt by a fire which occurred in its New York distribution center. Still, its Old Navy division registered a robust 4.0% comp, above its 1.3% SSS final estimate.

September marks the second month of Q3 2016. The Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 1.1% growth for Q3 (vs. 1.4% in 3Q 2015).

Exhibit 1. Performance - Overall and Compared to Expectations

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

Exhibit 2. Beat - Met - Missed

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