Analyzing the ICSC-Goldman Index: Why It Keeps Falling
Key Restaurant Indicator Updates: What Investors Can Expect
ICSC-Goldman index keeps falling
The ICSC-Goldman (International Council of Shopping Centers and Goldman) index tells us the trend in spending towards the consumer discretionary sector in the US. The ICSC-Goldman index released on June 20, 2015, came in at 1.5%. It fell from 1.9% compared to the previous week. When we compare this index to the same week last year, it fell from 4.1% to 1.5%.
What does it say about restaurant stocks?
This index doesn’t directly tell you about the sentiment towards the restaurant industry because it excludes restaurant sales. However, it helps the investor gauge the general sentiment of consumer spending in the economy. Restaurant stocks perform positively when the economy is improving. They perform negatively when the economy is getting worse.
With the index showing a downtrend in recent weeks, restaurant investors need to be cautious. Falling retail sales only tell us that consumers’ expenditure on retail has been falling. A similar indicator, Johnson Redbook Retail Sales Index, also tells us about the retail environment. We’ll discuss this more in the next part of this series.
More about the index
The ICSC-Goldman index is reported each week. It gives investors a picture of consumer spending in the US. This index is considered a more timely index. It gives you a closer look into weekly store sales movement. This is especially important for retail investors (XLY) that hold about 37% of the retail portfolio. XLY also holds 4% of McDonald’s (MCD), 3% of Starbucks (SBUX), 1.5% of Yum! Brands (YUM), and 0.3% of Darden Restaurants (DRI).
The index extrapolates the same-store sales data for about 80 big retail chains including J.C. Penny (JCP) and Macy’s (M). The ICSC-Goldman index excludes vehicle demand, but includes the same-store sales at retail outlets.
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