Retail

Retail Same-Store Sales Forecasts Trending Down

So few retailers report monthly same-store sales any more that quarterly reports are about all we have to gauge how sales and store traffic are doing. And things for the second and third quarters of 2016 are looking “meh.”

Jharonne Martis, director of consumer research at Thomson Reuters, expects second-quarter same-store sales to rise just 1% year over year. In the second quarter of 2015, sales rose 1.4%.

For the third retail quarter (August through October), sales are forecast to rise 1.3% year over year on the back of stronger back-to-school sales, but still slightly below last year’s year-over-year increase of 1.4%.

Martis noted that in late June and early July consumer confidence took a hit from the Brexit vote. But back-to-school shopping happens regardless of the macroeconomic picture, and Martis expects an “uptick in consumer spending” in the third quarter.

Amazon.com Inc.’s (NASDAQ: AMZN) Prime Day promotion occurred in mid-July, and the company reported more sales than a year ago. That, too, should bolster third-quarter e-commerce sales for Amazon and other retailers going into the back-to-school season.

Thomson/Reuters sees Kate Spade & Co. (NYSE: KATE) as the third quarter’s biggest winner, with same-store sales rising by 12.2%, on top of a 16% rise last year. The analysts also expect Ulta Salon, Cosmetics & Fragrances Inc. (NASDAQ: ULTA) to post a same-store sales gain of 9.9% in the third quarter, on top of a 12.8% gain in the same period a year ago. Other projected winners are home improvement stores Home Depot and Lowe’s, Lululemon, Foot Locker and off-price retailers Dollar Tree and Dollar General.

Among other retailers expected to see third-quarter gains are American Eagle Outfitters Inc. (NYSE: AEO), which is expected to pile a 6.8% gain on top of a year-ago jump of 21% in same-store sales. Strength in the company’s Aerie division is driving the hike in sales.

When Thomson Reuters polled retail analysts, many expressed bearish sentiments for retailers, with exposure to Europe. Full-line department stores (Sears, Macy’s, Nordstrom’s and the like) are expected to post lower same-store sales in the third quarter, but the hammer is expected to fall hardest on Staples Inc. (NASDAQ: SPLS), where European same-store sales are forecast to drop 9% year over year in the third quarter.

The retail environment will continue to be challenging in the third quarter, just as it has been in the first and second quarters of the year. July’s summer clearance sales will soon give way to August back-to-school promotions in the second-busiest retail season of the year. The National Retail Federation reckons total sales will rise from $68 billion a year ago to $75.8 billion this year on students from kindergarten age through college. Sales for K-12 students are estimated to reach $27.3 billion, and those more expensive college kids are figured to add $48.5 billion in sales.

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