Retailers are expected to announce their same store sales figures for the month of March on April 4 and 5.
Same store sales, or comparable store sales, is a key metric in the retail industry to gauge the performance of a retailer. Comps compare sales of stores that have been open for a year or more, thereby giving an indication of revenue growth that comes from new stores, and growth from improved operations at existing outlets.
Investors expect strong comps from retailers for March given several positive catalysts including the continuation of unseasonable mild temperatures, a more favorable calendar (an extra Fri/Sat), easy comparables, and exciting new fashion accessible to a broad demographic.
In addition, the Easter calendar shift (to 4/8 from 4/24 last year) and an associated earlier spring break season also bodes well for the retailers.
"Our channel checks indicated strong traffic, limited carryover and contained promotions," Oppenheimer analyst Pamela Quintiliano wrote in a note to clients.
Retailers reporting monthly comps include Gap, Inc. (NYSE:GPS), Ross Stores, Inc. (NASDAQ:ROST), TJX Companies, Inc. (NYSE:TJX) and Zumeiz, Inc. (NASDAQ:ZUMZ).
"We think both ROST and TJX are the best candidates for upside this month relative to management's guidance," RBC Capital Markets analyst Howard Tubin wrote in a note to clients.
Tubin noted that Limited Brands, Inc. (NYSE:LTD) also looks good in March as momentum at Victoria's Secret and Bath and Body Works continued during the month. In addition, PINK's Major League Baseball collaboration and the bathing suit offerings at Victoria's Secret were traffic drivers.
Meanwhile, rising gas prices did not seem to have an impact on mall traffic/conversion as channel checks indicated consistently strong traffic, especially among the teen retailers. In March, average gas prices increased to $3.94 vs. $3.64 the month prior which reflects an 8 percent sequential increase and a 9 percent increase over last year's $3.62.
In addition, the Oppenheimer analyst is not expecting significant upward earnings revisions as this is only the second month of the quarter and most retailers seem to be conservatively managing expectations given the pull-forward of demand from April to March.
"While overall commentary should be favorable we don't expect significant upward revisions as it's the second month of 1Q, compares are easy and most retailers are taking a wait-and-see approach/prefer discussing March/ April combined given the later Easter," Quintiliano said.