November Retail Sales Set For Modest Improvement

| About: Consumer Discretionary (XLY)
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By Jharonne Martis

The Thomson Reuters Same Store Sales Index is expected to show a 0.7% gain for November 2016, an improvement from November 2015's -0.7% result. Online sales might have stolen mall crowds on Black Friday, but retailers are benefiting from easy SSS comparisons with last year's weak sales figures.

The Discount sector is expected to post the strongest SSS growth in November, while the teen index is hurting the most. Gap has the heaviest weighting in our apparel sector and is bringing the overall group down with a -0.5% SSS estimate. Still, its Old Navy division continues to outperform the other divisions and is expected to register a 4.7% SSS.

Analysts polled by Thomson Reuters expect the Apparel sector as a whole to report a flat SSS compared to the -2.3% SSS recorded in November 2015. Meanwhile, L Brands (NYSE:LB) has the strongest estimate in this group at 1.4%, well below last year's 7.0% SSS. Victoria Secret's -0.8% SSS estimate brings L Brand's SSS down as it continues to remove various merchandise categories. Meanwhile, teen retailer The Buckle (NYSE:BKE) has the weakest November SSS estimate, at -12.8%, while Zumiez (NASDAQ:ZUMZ) has the strongest estimate at 10.3%.

November marks the first month of the retail industry's fourth quarter and the kickoff of the all-important holiday season. Our Thomson Reuters Quarterly Same Store Sales Index, which consists of 80 retailers, is expected to post 0.8% growth for Q4 (vs. 1.2% in Q4 2015).

Exhibit 1. November 2016 SSS estimates

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

Exhibit 2. Zumiez is on top, while The Buckle is expected to post the weakest SSS

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