Warm weather in parts of the United States in recent weeks could hurt September same-store sales, as consumers put off purchases of fall items like fuzzy sweaters and outerwear.
Across the eastern half of the U.S. it's been abnormally warm this September, said Paul Walsh, chief strategy officer at Storm Exchange, which lets companies hedge the financial risk of unplanned weather. That correlates very strongly to retail sales, specifically for fall apparel.
September temperatures have been 2 degrees warmer than the national average, or about 67.3 degrees Fahrenheit (19.6 Celsius) compared with 65.5 degrees, according to Storm Exchange. For every rise of 2 degrees, specialty retailers could see a drop of 1 percent in year-over-year same-store sales, Walsh said.
Same-store sales, or sales at established stores, are a key measure of financial performance for retailers.
Forecasting service Planalytics also cited a challenging past week in the East and Midwest for retailers selling sweaters, fleece items and boots, but noted that cooler weather that finally hit the West provided a strong surge in demand for fall apparel.
Still, in New England and the Mid-Atlantic, sales of fleece were down 26 percent in September, according to Planalytics.
With the unseasonably warm weather in the East, shoppers assumed they could buy cooler-weather items when the weather gets worse, and possibly on sale, if they wait long enough, said Walsh. Storm Exchange tracked data from nine specialty apparel retailers, including Gap Inc, Limited Brands Inc and AnnTaylor Stores Corp from 2002 to 2006.
Adding to the pressure are tough same-store sales comparisons with last year's cool fall weather, ideal for fall clothing, Walsh said.
Last year was colder than normal, and we had no storms at all, Walsh said, calling 2006 a perfect storm for retail fall sales. This year we're looking at it swinging back the other way.
The warm weather could have inhibited retail traffic as well as September retail sales, ThinkEquity's Edward Weller wrote in a research note published on Monday.
In this environment, selling sweaters or outerwear or shoes that aren't sandals or perforated is a near-heroic achievement for any mass market store ... Weller wrote.
But weather has a greater impact during transitions, such as September into October, and, unless wildly unseasonal, it will have less importance in coming weeks, he wrote.
Brean, Murray Carret analyst Eric Beder characterized the recent warmer weather as only a slight negative, with only a week or two affected out of a month.
It was warmer last week in the Northeast and the week before. But you also had cooler weather in the West. What's the net-net? Who knows? Beder asked.
More important than weather, said Beder, is the fact that in a full-price selling month, shoppers aren't coming out to shop.
This is going to be another mediocre month, Beder said, estimating low-single digit same-store sales growth for apparel retailers. The weather won't change that materially either way.
Most apparel retailers will report September same-store sales on October 11.
(Editing by Jeffrey Benkoe)