The ICSC–Goldman Sachs index, released on May 2, 2015, increased to 3.7% from 2.5% in the previous week. The index, however, declined from 4.4% in the corresponding week in 2014. The International Council of Shopping Centers (or ICSC) partners with Goldman Sachs to measure a weekly retail chain store sales index.
The ICSC–Goldman index is reported each week, giving investors a snapshot of consumer spending in the US. This index is considered to be a timely index, giving you a closer look into weekly store sales movement. This is especially important for retail investors such as those invested in the Consumer Discretionary SPDR (XLY). About 37% of XLY’s portfolio contains retail stocks. It also holds about 4% of McDonald’s (MCD), 3% of Starbucks (SBUX), 1% of Chipotle Mexican Grill (CMG), and 0.3% of Darden Restaurants (DRI).
Like the Gallup Consumer Spending measure, the ICSC–Goldman index also excludes vehicle demand, but it includes same-store sales at retail outlets. The index extrapolates the same-store sales data for about 80 large retail chains, including JCPenney (JCP) and Macy’s (M).
What this index says about restaurant stocks
The ICSC–Goldman index does not directly tell you about the sentiment toward the restaurant industry, as it excludes the restaurant sales. However, it is beneficial for the investor to gauge the general sentiment of consumer spending in the economy. Restaurant stocks perform positively when the economy improves and negatively when the economy worsens.
The Johnson Redbook Retail Sales index is similar to the ICSC–Goldman index, which we will discuss more in the next part of this series.