Why this week’s key releases seem more about expectations (Part 8 of 9)
The Johnson Redbook Index report for the week ended March 22 was released on March 25. Year-over-year growth in same-store sales came in at 3.1%, up 0.3% from the previous week.
What is the Johnson Redbook Index?
The index is a weekly measure designed to capture same-store sales growth at chain stores, discount stores, and departmental stores. The index provides guidance on retail sales trends but covers only about 10% of the total retail sales in the country.
International Council of Shopping Centers (or ICSC)–Goldman Sachs Retail Chain Store Sales Index
The ICSC–Goldman Sachs Retail Chain Store Sales Index report for the week ended March 22 was released on March 25. According to the reading, retail same-store sales declined 1.5% week-over-week, but grew 1.7% year-over-year. Last week, retail sales grew 0.7% and 1.5% week-over-week and year-over-year, respectively.
What is the ICSC–Goldman Sachs Retail Chain Store Sales Index?
The index measures the change in same-store sales based on a sample that includes major retail chains that are statistically representative of sales in the retail industry. The Index reading doesn’t include vehicle and restaurant sales. Like the Johnson Redbook Index, it covers only about 10% of the total retail sales in the country.
What did this week’s reading indicate?
Michael Niemira, ICSC vice-president of research and chief economist, said, “Electronics stores saw a strong improvement while discounters and apparel stores improved on a year-over-year basis. However, business was softer than the same week of the prior year for grocery, drug, department, furniture stores and wholesale clubs.”
Major publicly listed electronics, discount-store, and apparel retailers include Best Buy (BBY), Gap (GPS), Dollar Tree (DLTR), and Dollar General (DG). These companies could have benefited from retail traffic last week. On the other hand, wholesale clubs such as Costco (COST) may have suffered lower sales despite the advent of warmer weather.
According to the ICSC, retail sales are expected to grow ~3% in March on a year-over-year basis. Last month, same-store sales rose 2.2%. Also, this March is likely to be tougher on year-over-year growth comparisons, due to Easter shifting to April this year from March last year. However, pent-up demand during the unusually cold winter months of January and February, which kept people indoors, should help mitigate that shift.
As these are weekly releases, they’re less likely to impact fixed income ETFs like the Core Total U.S. Bond Market ETF (AGG), which tracks the Barclays U.S. Aggregate Bond Index, and equity (OEF) markets—unless the indices report very sharp changes.
To read about another indicator that was optimistic about future growth in the manufacturing sector, read on to Part 9 of this series.
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