Analyst Concerned That Retail Sales Hit the Doldrums in March

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March could be a poor month for retail chains, according to analysts at Janney Montgomery Scott. Cool weather during the month slowed the start of the spring selling season. Promotional selling instituted to help control inventory, while basically flat with last year, will not help sales growth.

Janney analysts say that March same-store sales could “disappoint.” The firm lists six retailers Janney believes will post sales below the consensus and two that should top consensus estimates compiled by Retail Metrics.

Abercrombie & Fitch Inc. (NYSE: ANF) has a consensus same-store sales forecast for March of negative 7.3% compared with March of 2014. The Janney analysts expect Abercrombie to post a drop of 8%, double the 4% drop the teen retailer posted last year in March.

Aeropostale Inc. (NYSE: ARO) is tagged for a consensus same-store sales decline of 8.6%. Janney’s analysts believe the drop will be 11%, slightly better than the 13% drop of a March 2014. The analysts noted that Abercrombie and Aeropostale “continue to disappoint in our opinion and are likely to continue to struggle as they execute their turnaround strategies.”

The consensus same-store sales estimate for Gap Inc. (NYSE: GPS) calls for growth of 0.8% in March. The Janney estimate calls for a 2% drop, along with this comment:

We believe Old Navy’s ability to “subsidize” weak results at Gap will lessen in 2015. We believe the Gap brand will continue to pressure margins as product issues remain, and based on their nine-month lead time these are likely to last through spring, with potential later 2H15 improvement.

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The other underperformers, according to Janney, are ANN Inc. (NYSE: ANN), Lululemon Athletica Inc. (NASDAQ: LULU) and Buckle Inc. (NYSE: BKE). ANN and Lululemon are tagged to post higher same-store sales, but still below the consensus estimates. The Janney analysts expect Buckle’s drop to be sharply lower than the consensus estimate.

Two retailers expected to post better same-store sales than the consensus estimates are Bebe Stores Inc. (NASDAQ: BEBE) and Express Inc. (NYSE: EXPR).

The Easter holiday fell two weeks earlier this year than it did in 2014, which should benefit March sales since most of the Easter purchasing would have taken place in March. Due to the seasonal change and the changing date for Easter, most retailers like to view the March and April as a single unit, “Marpril,” and we will need to wait until the end of this month to get that data.

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