Improvement over previous week
The Johnson Redbook chain store sales index increased by 2% on a YoY (year-over-year) basis in the week ending July 4. The index grew by 1.7% in the previous week. The index finally hit the 2% mark after seven straight weeks. Yet the index continues to be in negative territory when it comes to a month-over-month comparison. It fell by 1.4% in June and by 1.5% in May.
Johnson Redbook Index
The Johnson Redbook retail sales index is prepared by Redbook Research. It tracks retailers across six categories:
- apparel specialty
Redbook attributes the strength it observed in the final week of June to hot weather, which triggered demand for summer merchandise. According to Redbook, consumers stocked up on food ahead of the July 4 Independence Day holiday weekend and shopped in air-conditioned malls and outlets to escape the hot weather.
Retail Economist–Goldman Sachs Index
The Retail Economist-Goldman Sachs index for the week ending July 4 indicated a 3% rise in US same-store sales on a YoY basis. In the previous week, YoY same-store sales rose by 2.7%. The strong performance in the final week of June was driven by housing-related spending. Also, other retail segments improved as discounters, drug stores, and dollar stores saw lifts in spending. Same-store sales rose by 2.1% on a week-over-week basis.
Key takeaways for the retail sector
The strong same-store sales growth in the last week of June reported by both indices is a positive indicator for department stores.
Department stores including Macy’s (M), Nordstrom (JWN), Sears (SHLD), Kohl’s (KSS), and specialty retailers such as Best Buy (BBY) have taken several steps to increase store traffic and improve same-store sales. One example is the Best Buy launch of the Samsung Open House store-within-a-store.
Department stores account for ~5.9% of the portfolio holdings of the SPDR S&P Retail ETF (XRT).
Same-store sales depend on consumer spending levels, which is discussed in the next part of this series.