Mixed weather conditions were both a help and detriment to retail industry sales.  While July temperatures were flat to last year, it was significantly hotter in the South (hottest in 10 years) with days over 90F up +40% along with the strongest middle-July heat-wave in 16+ years for the Northeast.  These were positives for Summer clearance sales and consumable food/beverage categories but a negative for Mall based stores already focusing on back-to-school and Fall apparel.  The negative factor in July was rainfall which was up +11% over last year’s wet July making it the wettest retail July in 12 years which is a dampening factor on sales.  Our regression analysis of industry sales gains show warm/dry is the best conditions for stronger sales with a 76% correlation between sales and weather.  An average July for the industry is 4% but wet weather can dampen sales by as much as +0.9% suggesting a +3.1% comp was possible this year but the negative economic factors, gasoline prices and some cannibalization of sales into the strong June resulted in the +2.6% gain.  A warm/dry July typically averages +4.7% for the industry.

Retail comp-store sales gains were twice Wall Street expectations!  Thank the weather and rebate checks.  Despite record high gasoline prices and economic worries, Retailers posted a very strong month.  With the South Central U.S. having the hottest June in 10 years (90F days up 57%) along with a scorching heat-wave in the Northeast (hot 90F days up 19% over LY) and the hottest Father’s Day weekend in 16+ years all boosted demand for Summer seasonal items like A/C, fans, sunscreen, bug sprays, beverages and consumable food categories.  Over the past 14 years, sales and weather have moved up and down together 80% of cases and never in 22+ years were there three straight Junes with comps below 3%.  So, the +2.5% expectation on Wall Street was ignoring both history and the weather.  Historically a warm June average gains are +4.9%, so the +4.3% gain was in line with what Mother Nature would have indicated.