September retail sales: improving, but is it enough? September same store sales, out tomorrow, are expected to decline by 0.8 percent year over year, according to RetailMetrics.
That number has risen steadily in the past two weeks. It would be the best performance in a year, and that's little surprise: comps start getting very easy from here, because sales started dropping dramatically this time last year.
The good news is that we are seeing a modest sequential improvement as well. For example, August sales declined 2.3 percent year over year, so an 0.8 percent decline in September is definitely an improvement.
Cynics will note that much of the improvement will be due to the fact that Labor Day spilled into September, and they are undoubtedly right.
Still, there are positive trends:
1) mall traffic appears to have been stronger;
2) gas prices are lower;
3) weather was cooler in the Northeast.
Company comments have also given some reason for optimism:
1) earlier guidance provided by several companies, including Target, JC Penney, and Ross Stores, were generally positive for September sales.
2) Costco posted a positve 1% comparable store sales;
3) Family Dollar beat Q3 earnings expectations and guided Q4 in line with 3 to 5 percent comparable store growth;
4) Nike said futures orders had stabilized;
5) Williams-Sonoma said on Tuesday that future orders had stabilized.
Few companies are expected to post positive same store sales in September, but they include: Aeropostale, CVS, TJX, Ross Stores, 99 Cents Only.
The vast majority have negative comps, the worst performers (more than 15 percent decline in sales expected): Abercrombie & Fitch, Ethan Allan, bebe, Pacific Sunwear.
Here's the problem: retail stocks had a huge runup in the third quarter. The S&P Retail Index was up over 20 percent last quarter, despite precious little evidence of anything other than big-time cost cutting. There certainly was no sign of topline growth.
And it's unlikely we will hear too much about it for Q3; CEOs are likely to provide very little if any commentary about Christmas. Analyst and trader chatter is that it will come late.
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