Nomura Securities Retail Sales Review and Weekend Reading
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Rating Summary:
6 Buy, 13 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Nomura Securities Retail Sales Review by Paul Lejuez
Lejuez said, "August results were generally good. The standout on the positive side was Limated (NYSE: LTD) with comps +11%, well ahead of our estimate and consensus. GPS was the negative standout. The major divisions, Gap Brand and Old Navy, posted comps below our estimates (and consensus).While the more significant impact of Irene will be felt in comps next month (Sunday started retail September),the storm did hurt apparel retailers’ August comp. Of those that quantified the impact, Macy’s said it hurt comps by 150bps, Saks said 150bps, TJX (NYSE: TJX) said 100bps and JC Penney (NYSE: JCP) said 60bps. LTD, Ross Stores (Nasdaq: ROST) and TJX remain our top picks for 2H."
Retail Weekend Reading -
Lejuez said, "An analysis on the extra week of sales in the F12 retail calendar. Because the 4-5-4 retail calendar (adds to 13 weeks each quarter) includes only 364 days (13 wks X 7 days/wk x 4 quarters = 364 days) every five to six years requires a catch-up to reset the calendar. For most softlines retailers, the extra week in 2006 added 1–2% to annual revenues and 3–4% to annual EPS. The extra week tends to be more profitable than an average week, as certain expenses are paid on a monthly basis and not incurred during the 53rd week. While the extra week will not compensate for what is likely to be another challenging year for the consumer and retailers, every little bit helps. At this point, we do not think all consensus estimates contemplate the extra week."
Lejuez said, "August results were generally good. The standout on the positive side was Limated (NYSE: LTD) with comps +11%, well ahead of our estimate and consensus. GPS was the negative standout. The major divisions, Gap Brand and Old Navy, posted comps below our estimates (and consensus).While the more significant impact of Irene will be felt in comps next month (Sunday started retail September),the storm did hurt apparel retailers’ August comp. Of those that quantified the impact, Macy’s said it hurt comps by 150bps, Saks said 150bps, TJX (NYSE: TJX) said 100bps and JC Penney (NYSE: JCP) said 60bps. LTD, Ross Stores (Nasdaq: ROST) and TJX remain our top picks for 2H."
Retail Weekend Reading -
Lejuez said, "An analysis on the extra week of sales in the F12 retail calendar. Because the 4-5-4 retail calendar (adds to 13 weeks each quarter) includes only 364 days (13 wks X 7 days/wk x 4 quarters = 364 days) every five to six years requires a catch-up to reset the calendar. For most softlines retailers, the extra week in 2006 added 1–2% to annual revenues and 3–4% to annual EPS. The extra week tends to be more profitable than an average week, as certain expenses are paid on a monthly basis and not incurred during the 53rd week. While the extra week will not compensate for what is likely to be another challenging year for the consumer and retailers, every little bit helps. At this point, we do not think all consensus estimates contemplate the extra week."
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