WEATHER TRENDS INT'L ANNOUNCES JUNE WEATHER BOOSTS RETAIL SALES TO 4.3%
July 10, 2008 (PRLEAP.COM) Business NewsWeather Trends International released their June 2008 Retail Sales Weather Analysis for the United States, United Kingdom, and G-20 Countries.
Ignoring the weather and its impact on retail sales is something Wall Street does often - but it's a BIG mistake! A simple analysis of past weather trends and retail industry same-store sales data shows the weather plays a not so surprisingly strong role in how well the industry will do. In June, the relationship between retail same-store sales and year-over-year national temperature changes is a significant 74% and in 11 of the past 14 years sales have moved up and down together with the weather. When temperatures go up sales gains go up, when temperatures go down sales gains are weaker 80% of the time from 1994 to 2007.
It's also interesting to note that retail sales in June will typically go in a three year cycle from peak to trough, but in 23+ years the 3rd year from the peak has always brought stronger gains than the prior year. 2008 is that year! Retail analysts expected sales gains in the +2% to +2.5% range, but this analysis combined with some favorable weather trends suggested 4% or better was more likely. "June national temperatures were warmer than average and while flat to last year there were some exceptionally favorable weather trends like the hottest Father's Day week in 16+ years for the nation as a whole; the hottest weather in 10 years in the South Central and Southeast; the warmest in 4 years in the Northeast and the driest July 4th weekend in three years for the nation as a whole. This resulted in the strong 4.3% gains we saw today, especially from Discounters and Clubs who have more seasonal items to offer" said Bill Kirk, CEO Weather Trends International.
The negative weather factors were primarily limited to the North Central U.S. where it was the coldest in 4 years with record flooding. All of the negative inflationary factors continue to weigh on consumer discretionary spending with gas prices up 39% over LY, diesel prices up 65%, Corn futures up 70% and Wheat prices up 77% adding to already high food inflation costs. "Consumers are clearly buying seasonal items much closer to need and the weather in 2008 has certainly driven the timing of those seasonal need purchases. June is no exception with seasonal category sales for beer and beverages, menswear - summer apparel, A/C and fans, pool supplies and suncare all experiencing a significant increase in sales after the worst Spring weather in a decade and the 2nd worst retail sales gains in 24+ years" added Kirk.
The U.S. fared better than most of the G-20 countries which continued to show the 13th straight month with cooler year-on-year temperatures. This is an unusually long trend of widespread colder global temperatures with June trending the 2nd coldest in 12 years and global low temperatures the coldest in 16+ years. The cooler global trends are due in large part to two factors 1) the sun and 2) widespread sea ice. The sun drives the weather here on Earth and currently it is in the longest solar minimum cycle since the late 1800s. This has solar physicists concerned as a very strong maximum cycle was forecast six months ago and it didn't happen. The concern of solar physicists at a Montana State University conference is whether the sun is entering a longer Maunder Minimum like that of the 17th Century when the little ice age developed.
As a result of the low solar radiation from the sun, sea ice here on Earth has made the greatest year-over-year increase since records started in 1979. Last year at this time ice covering the planet was at a 28 year low at 2.9 million square kilometers below the 28-year average. This year there has been a record 4 million square kilometer year-over-year increase in ice coverage which is now trending near normal according to data from the U.S. National Snow and Ice Data Center. The significant increase in ice coverage on the planet reflects incoming solar radiation further helping to cool the planet. So, for now the planet is enjoying a cooling trend which is bad news for retailers and seasonal category sales around the world as warmer Summer weather leads to higher overall sales.
About Weather Trends International: The global leader of actionable business weather guidance for retailers, manufacturers, pharmaceutical companies, agricultural firms and financial analysts whose product's sales or business performance is impacted by the everyday volatility of the weather. Clients include some of the world's most respected and successful companies like Wal-Mart, ASDA, Target, Kohl's, Bon-Ton, Gander Mountain, Sherwin Williams, Anheuser-Busch, Johnson & Johnson, 3M, Levi's, Pizza Hut, Merrill Lynch and Citigroup among dozens of others. Its weather solutions and understanding of how consumers respond to the weather is used throughout organizations to help "manage the weather risk" by timing and planning key marketing, advertising, markdowns, and inventory allocation decisions around favorable weather opportunities. Utilizing technology first developed in the early 1990s, Weather Trends International's unique statistical, math and trade secret formula forecasting methodology projects temperature, precipitation and snowfall trends by day and week a year-ahead for 4,000 cities in 129 countries.
Websites: www.wxtrends.com www.myskeye.com