Worst Retail Sales Gains in 37 Years - Blame The Weather!

BETHLEHEM, Pa., Jan. 9 /PRNewswire/ -- Retail industry December same-store sales are expected to be the 2nd worst in 37 years and the weather is once again a valid excuse. This 5-week retail calendar December (12/2 through 1/5) was the 3rd coldest in 15 years and the snowiest in seven years bringing major disruptions to the critical holiday shopping season. While Wall Street grows weary of the weather excuse, it was valid in 9 of the last 11 months and here is why: based on historical industry sales performance trends the ideal weather in the Spring and Summer is obviously warm/dry weather. As consumers, we buy much closer to need and warm/dry weather spurs our interest in purchasing the items retailers are merchandising. In the Fall, it's cold weather that spurs those back-to-school apparel sales but by December it's all about moderate weather - not too cold and definitely dry with little snow. As the chart below shows, only two months this retail year have been "in-sync" and that was the record warm March and the coldest November in five years. In both months, the weather brought Wall Street a surprise with better than expected industry gains. So what happened the rest of the year - "out-of- sync-weather"!

The retail calendar started off with the coldest/snowiest February in 28 years which is completely out-of-sync as shelves were fully stocked with Spring items, but consumers weren't buying as they hunkered down. The Easter shift into April (which everyone always assumes means higher April sales) didn't materialize as the coldest/snowiest April in over a decade resulted in the worst retail sales gains ever! The Summer got off to a colder start than the year prior with the number of hot days over 90F down 25% through July and really hot days over 100F down 49% vs year ago. This resulted in excess inventories for retailers and steeper markdowns which continued the pain of weak (<3%) retail gains. Then came Fall which was the hottest in history and the shelves were fully stocked with Fall items that consumers didn't need. This was a dramatic change from the Fall prior which was the coldest in a decade and brought strong retail sales. Finally, November brought cold and snowy weather and consumers went out and bought the things they needed resulting in the 2nd best gains in all of 2007, a surprise on Wall Street.

Now December. A cold and snowy December is NOT what retailers want as historically a disruptive weather pattern during the key holiday shopping season results in weak sales. With the 2nd snowiest December in a decade (26% above normal, and 315% more than last year for the nation as a whole with near record snowfall in parts of New England and the Midwest), the 3rd coldest December in 15 years, ice storms, high winds and flooding rains plaguing the U.S. it was the worst possible weather for retail. On December 16th, 58.1% of the U.S. was blanketed in snow which was a near record for so early in the season.

The last time conditions were this bad was December 2000 and that not so coincidentally brought the worst retail sales gains, +0.7%, in 37 years. 2007 might be equally bad when results are announced tomorrow. The chart below summarizes the year-over-year changes in weather this December vs last year.

The cold was certainly good for must have Winter items like ice melt, auto batteries (fail in cold weather), and snow accessories where sales gains were 500% over last year. But, holiday gift category sales were in large part made on-line cannibalizing brick and mortar retailers. "The retail industry gain in 2007 was only 2.3%, which will rank as the worst in 37 years, clearly a recession for retailers," said Bill Kirk, CEO, Weather Trends International. "With 9 out of 11 months completely out-of-sync weather-wise for retailers in 2007, the weather excuse was certainly a valid one and one we heard often," added Kirk. For detailed information on December by city/country visit www.wxtrends.com