Retail Same-Store Sales and Earnings: Weather, Inflation an Issue

Retail same store sales and earnings: weather, inflation an issue. Retailers will report January same store sales tomorrow. While RetailMetrics is expecting an increase of 2.6 percent in same store sales, those numbers have been trending lower. Recent numbers from the International Council of Shopping Centers have indicated weather has definitely impacted sales.

That's the bad news. The good news is what matters are earnings, and while January is the last month of the quarter for most retailers, it is also the least important, accounting for about 25 percent of sales. It is largely a clearance month, so the hope is that the bad weather will have only a modest impact on earnings.

But there are other issues: 1) comps are getting more difficult, since retail began to recover last year, and 2) inflation in key commodities (cotton) may be starting to pressure margins. This is a story for later in the year, but expect it to come up in the conference calls that will begin in a couple weeks.

One factor that may mitigate any bad news: retailers have dramatically underperformed the broader market. The S&P Retail Index is down about 2 percent since December, while the S&P 500 is up 8 percent.

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