The Retail Economist-Goldman Sachs Weekly Chain Store Sales Index came in with a 1.1 percent decline for the week ended Feb. 18 compared with the prior period. On a year-over-year basis, retail sales inched up 0.6 percent.
The drop follows lackluster fourth-quarter results from retailers — especially in the department store segment. Wall Street noticed, and since the beginning of the year the segment is down about 10 percent. But investors have swooped into the broader retail sector trading shares up on higher volumes. As a result, the S&P Retailing Industry Group Index is up 6 percent since the first day of trading this year.
In the weekly sales report, Michael P. Niemira, chief economist of The Retail Economist LLC, said the decline followed a gain in the previous week that “was the strongest since the week of Dec. 24, 2016.” Looking ahead, warmer weather is expected to trigger spending.
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“As more springlike weather rolls in for the nation, customers’ interest in spring fashion and other seasonal merchandise has been sparked,” Niemira said. “However, the ‘weather catalyst’ for spring-merchandise demand has been erratic and spring-merchandise demand will likely remain so until the weather and the calendar seemingly are more in synch.”
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The National Oceanic and Atmospheric Administration’s National Weather Service is calling for warmer weather on the East Coast, and below-normal temperatures in the Western U.S. in the next two weeks.
Regarding recent quarterly results, Thomson Reuters I/B/E/S said of the 28 retailers that have posted fourth-quarter same-store sales, 30 percent have “exceeded estimates, while 70 percent missed.” On Tuesday after market, Dillard’s Inc. reported same-store sales for the quarter that declined 6 percent. Still, apparel performed well.
“While declines were experienced across all categories, ladies’ apparel and men’s apparel as well as accessories performed better versus the overall trend while home, furniture and shoes were weaker,” said Telsey Advisory Group analysts in a report this morning. “Regionally, sales were strongest in the East, followed by the West and Central areas.”
Shares of the retailer opened this morning up 1.8 percent to $54.53. The stock’s 52-week low is $53.36, and the high is $88.59.
“The challenging retail environment continues to weigh on Dillard’s comparable-store performance, resulting in ongoing weakness in profitability,” the Telsey analysts said. “Further, inventory continues to track well above comps, which could continue to pressure results to the extent higher markdowns are needed to bring inventory more in line with sales trends.” As a result, the firm lowed its earnings per share estimate for the year to $5.20 from $5.66.
Macy’s Inc. also reported results yesterday, which showed progress. The stock closed down 0.8 percent Tuesday to $32.29. This morning it opened flat. Telsey analysts noted that results beat expectations as gross margins came in stronger. For the year, results were not up to par, though, the analysts said in a report this morning.
“Overall, the company’s 2016 performance was a disappointment and Macy’s has indicated that changes in the business model need to be more dramatic with a heightened focus on moving faster,” the Telsey analysts stated. “Heading into 2017 and beyond, we believe the crux of the story remains the progression around real estate while moves are being made to overcome the secular changes around consumer shopping habits.”