Strong September results will drive this quarter with analysts expecting growth across broadlines and specialty apparel. Reports out this morning from the Street’s largest firms, all point to positive back-to-school shopping. Holiday looks more ho-hum, with macro concerns still weighing consumers down.
Take a look:
Barclays: Analysts expect Holiday sales growth of 2.2 yo 2.6%, below last year’s 2.7% increase. An extra shopping day, better weather and lower gas prices may boost traffic. Seasonal hiring remains flat, pointing to negative expectations from retail management.
Citi: Strong same-store-sales from Back-to-School will buoy the broadlines. Analysts found stores less able to cross sell as consumers stuck to their shopping lists. Citi expects department stores to post 2.4% growth, while general merchandise will jump 8.7%.
Credit Suisse: Analysts conducted SKU checks and found difficulties with premium pricing strategies, specifically at Urban Outfitters. It works when styles are on mark, but when they miss, retailers are stuck with a greater assortment of looks that don’t move off shelves.
Deutsche Bank: Same store growth of 4.1% and 8.1% on a 1-year and 2-year basis in September, representing a sequential acceleration of 80 basis points and 120 basis points, respectively,
Goldman Sachs: Teen and kid retailers are generally more recession resistant than adult peers. “Younger consumers generally prioritise apparel spend more so than adults, particularly around key shopping periods like back-to-school and Holiday.” Picks include Abercrombie and Fitch.
Morgan Stanley: Increased promotions at a few retailers could result in margin declines, specifically at the Gap and American Eagle Outfitters. The first half of September benefited from lost sales in August due to Hurricane Irene.
Other data out on the economy has been generally positive as well, with the August ISM easily beating expectations.