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Summer Heat Raises Retailer Estimates: Citi

Citi raised earnings estimates for a numer of retailers, as July's warm weather heats up sales, according to its same-store sales preview.

Christopher Furlong | Getty Images

July same-store sales estimates are expected to meet and possibly surpass expectations for broadline retailers, amid the hottest July in 116 years, according to the report. Citi raised earnings estimates for Costco from 7 percent to 9 percent to 8 percent to 10 percent, Kohl’s from 2 percent to 4 percent to 3 to 5 percent and Macy’s from 4 to 6 percent to 5 percent to 7 percent.

If inventories end the quarter as forecast, Citi expects retailers to deliver high sales, gross margins, and earnings for the second quarter.

Same-store sales are expected to rise 6.4 percent in July, up from a 4.1 percent increase in the same month last year and compared with an 8.7 percent increase in June, according to the Citi Investment Research and Analysis SSS index.

Citi expects same-store sales at general-merchandise stores to rise 6.9 percent, and a department-store same-store sales to increase by 5.3 percent.

The warm weather, which helped stores sell through summer clearance merchandise, and an increase in promotional events, may benefit discount stores, including Costco, JC Penny, Kohl’s and Target this quarter.

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CNBC Data Pages:

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Disclosures:

Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to Costco Wholesale Corp, JC Penney Co Inc, Nordstrom Inc, Kohl's Corp, Target Corp.

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