While the media got excited about strong Black Friday sales, November retail industry overall same-store sales gains will likely be in negative territory – the worst in decades except for Wal-Mart (industry results are announced Thursday). Why so bad? We’ll despite gas prices showing a record plunge down 40% vs a year ago and down 56% from July highs consumers are clearly only buying the must have need items. Weather drives need items. While November was the coldest in 6 years and 3rd driest in 16+ for the U.S. (favorable for store traffic and sales) many seasonal sales occurred in August – October when the weather was the coldest in 11 years for parts of the Eastern U.S. Last year, this period was record hot (hottest in 114 years) and then when it did get cool in November there was a huge surge in both holiday sales but also seasonal sales thus the strong industry gains of +3.5% (2nd best gains in all of 2007). So, now we’re up against a really tough sales comparisons with arguably the worst economy in 80 years. So, expect sales in negative territory and a bad reaction on Wall Street. Below is a regional summary of how November fared in the U.S.
For the rest of the world there was some “out-of-sync” weather that likely curtailed seasonal category sales and dampened retail results. Russia for example had the warmest November in 16+ years, great if you’re selling beer or food categories but not great for apparel or cold seasonal items. Canada also had the warmest conditions in 7 years putting a damper on seasonal sales as well. In the Southern Hemisphere, Argentina had the warmest November (their late Spring) in 16+ years which is a big plus for Spring sales so the retailers there will fare better there. On the cold side, India was the coolest in 3 years, China the coolest in 5 years, Mexico and the U.S. coolest in 6 years and Brazil the 3rd coolest in 16+ years. See map below which depicts November 2008 temperatures vs 2007.
Year-to-date the planet is still trending the coldest since 1997. Why? The 32-year cold phase of the Pacific Decadal Oscillation Cycle (cold phase of Pacific Ocean water temperatures) has started and is now the coolest in 50+ years. The sun continues it’s longest solar minimum cycle in over 100 years which further helps to cool the planet. Ice coverage across the globe is up 1.2 million square kilometers over last year at the North Pole and the South Pole coverage continues to be well above average with 400,000 square kilometers more ice than the long term average despite entering their normal Summer melt season. All of these factors have kept the planet relatively cool, only +0.3C above average, well below the peak global anomaly observed in 1998 (+0.6C). The image below from NASA shows polar ice coverage at the North Pole is approaching the biggest in 5 years and not much different than observed 29 years ago! So much for the CNN headline a few months ago that the North Pole would melt this year – IT DIDN’T!
