Restaurant Investors Should Watch the ICSC-Goldman Index
So Many Things Affect Restaurants: What Should Investors Watch?
Retail sales in the ICSC-Goldman Index
The International Council of Shopping Centers and Goldman (ICSC-Goldman) Index shows spending trends in the US consumer discretionary sector. The index released on June 6, 2015, remained unchanged at 2.1% compared to the previous week. Year-to date, the index has been lower compared to the corresponding period in 2014.
Why this index is critical for retail investors
The ICSC-Goldman Index is reported weekly. It’s a timely index that gives investors a close look at the weekly same-store sales movement for US retail stores. The ICSC-Goldman Index excludes the demand for vehicles but includes same-store sales at retail outlets. The index extrapolates same-store sales data for about 80 large retail chains, including J.C. Penny (JCP) and Macy’s (M).
What the index reveals about restaurant stocks
The ICSC-Goldman Index doesn’t directly reveal the situation for the restaurant industry. However, it helps investors gauge the general sentiment of consumer spending in the economy. This sentiment affects restaurant spending.
The index is also beneficial for investors in the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY holds about 10% of restaurant stocks, including 4% of McDonald’s (MCD), 3% of Starbucks (SBUX), 1% of Chipotle Mexican Grill (CMG), and 0.3% of Darden Restaurants (DRI).
The Johnson Redbook Retail Sales Index is another measure of retail sales in the United States. The index is similar to the ICSC-Goldman Index. We’ll look at Johnson Redbook in the next part of this series.
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