Posted by:  Bill Kirk, CEO

There is a growing avalanche of bad news for overall February 2010 retail industry same-store-sales.  Results are announced March 4th – here are 10 reasons why they will likely come in much lower than the +2% to +3% expectations on Wall Street:

1.  Snowmageddon!  As the chart below indicates, February national snowfall will be off the chart and likely to crush all records for the snowiest February in 115 years.  It’s tough to convince consumers to make Spring purchases when snow is all we see.  THIS IS A BIG NEGATIVE!

2.  The most highly correlated external factor to overall retail industry same-store-sales (SSS) is SNOW with an 84% correlation toward LESS being more favorable for higher SSS.  Over the past 30 years, a snowier February results in lower than expected SSS for 82% of cases.  THIS IS A BIG NEGATIVE!

3.  A cold/wet/snowy February average SSS are +1.3% over the past 30 year’s vs a warm/dry/little snow February which brings much higher SSS of +6.7%.  THIS IS A BIG NEGATIVE!

4.  There were 21 days this February with significantly more snow than last year and the most snow before Valentine’s and President’s Day in decades.  Nearly 70% of the country was covered in snow (49 of 50 states) prior to Valentine’s Day – the most on record.  THIS IS A BIG NEGATIVE!

5.  The Consumer Confidence Index is the 2nd most correlated external factor to retail industry SSS at 73%.  While February consumer confidence came in at 46, much lower than the 55 predicted, it is down from the 56 in January.  90 is considered a good economy.  THIS IS A BIG NEGATIVE!

6.  The next most correlated factor is temperature (46%) with warmer being better.  February 2010 is on pace to be the coldest since the 1970s (30+ years) with a 5.2F drop from last year.  Every 1F colder can cost retailers up to 0.7% in lost sales.  THIS IS A BIG NEGATIVE!

7.  A stronger than expected January (we had that in 2010 with the +3% gain) is followed by a weaker than expected February in 63% of cases over the past 30 years.   THIS IS A NEGATIVE!

8.  Unemployment is at +9.7% this February vs +8.1% a year ago.  THIS IS A NEGATIVE!

9.  Gasoline prices are up +39% vs a year ago at $2.66 a gallon vs $1.91 gallon.  THIS IS A NEGATIVE.

10. THE ONE BIG POSITIVE?  Very easy comparisons to last year February SSS results which were the worst in 30 years at -4.3% according to data from ICSC.  If it wasn’t for this easy comp, February 2010 would be a complete disaster; even with the easy comp results are likely to be much lower than expected!

CLICK ON CHART FOR LARGER VIEW

Posted by Bill Kirk, CEO

This weekend the BBC throws more cold water (or should we say snow balls) on the “ClimateGate” scandal and professor Phil Jones (former head of the East Anglia Climate Research Unit (U.K.), lead IPCC author and data provider for the infamous “hockey stick”).  The professor admits that ”there has been no statistically significant warming for 15 years” and it’s possible that the Medieval Warm Period (800AD – 1300 AD) was warmer than the 20th century as thousands of climate scientists believe is the case.  This is the first time a leading IPCC author admitted that the science is not settled!  For the full story CLICK HERE.

The next group of “scientists” that should be investigated are right here in the U.S. at the National Oceanic and Atmospheric Administration (NOAA), Penn State’s Michael Mann (Ohh..he’s already under investigation), NASA climate activist James Hansen and Noble Gore.  Supposedly, January was the warmest ever for the planet while much of the world was in a Deep Freeze and blanketed in 49 million square kilometers of snow across the Northern Hemisphere (2nd most on record in December, 6th most in January and very likely the most ever in February according to data from Rutgers University’s Global Snow Lab).  WTI tracks thousands of weather reporting sites from around the world and those stations show a much colder January across the globe.  Supposedly, it was the Oceans that caused the record warm January global temperatures as you and I have no way to validate that data.

Of course “weather” is not “climate” as we’re all reminded, most recently by New York Times reporter John Broden who said in his February 10th, 2010 story Climate-Change Debate is heating up in Deep Freeze.  John says “Most climate scientists respond that the ferocious storms are consistent with forecasts that a heating planet will produce more frequent and more intense weather events.”  NOT!  Over the past 15 years when there has been no significant warming and actually dramatic cooling the past 4 years, we’ve had a dramatic increase in Northern Hemisphere snow cover and earlier than normal snowfall.  Rutger’s snow stats show the following:

• October:  7 of the past 10 years above average Northern Hemispheric snowfall
• November: 15 of the past 19 years above average Northern Hemispheric snowfall
• December: 17 of the past 21 years above average Northern Hemispheric snowfall
• January: 6 of the past 8 years above average Northern Hemispheric snowfall
• February: on pace to be the snowiest ever!

In fact, January Northern Hemisphere snowfall has shown a 5 million square kilometer increase in snowfall over the past 20 years going from 1-2 million square KM below average in the 1980s and 1990s to 1-3 million square KM above average in the past 10 years – more similar to the 1970s!  So the real data suggests the Winters are getting longer, not shorter and cold and snow are much more frequent further South in recent years.

So, be a skeptic when the media or a politician or academic professor or government agency tells you the debate is over!  It’s just getting started!  Read up on the Pacific Decadal Oscillation (PDO) cycle as it’s very likely the major global factor responsible for the colder and snowier trends the past 4 years and likely to continue for 28 more years while it goes through it’s cold cycle phase.

Posted by Bill Kirk, CEO

Globally- it was a frigid January with the coldest and snowiest conditions in decades for much of the U.K., Europe, Russia, Northern China and the Southern U.S. which is a big negative for overall retail sales performance.  

Historically a warmer, drier and less snowy January results in +5% higher retail industry same-store sales (SSS) gains compared to a cold and snowy month.

Here in North America the pattern was up-side-down with Canada having the 2^nd warmest January in two decades with snowfall across the country down -47% vs. a year ago while the Deep South of the U.S. had snowfall up +161% in the Southeast over last year (most in 14 years), up +188% in the South Central U.S. (most in 13 years) and up +331% in the Southwest (most in 5 years).  The late month Deep South snow storm resulted in U.S. snow cover reaching 70% of the U.S. blanketed in some snow – something that hasn’t occurred in decades.  Across the Southern U.S. temperatures were also the coldest in 9 years with record breaking freezes as far south as Florida driving triple digit sales gains for Winter merchandise.  CLICK ON CHART FOR LARGER VIEW

Across the northern U.S. it wasn’t quite as bad with the Pacific Northwest having the warmest January in over 18 years and snowfall down a whopping -83% the least in 16 years (very favorable for retail store traffic).  Even in the North Central U.S. and Northeast snowfall was down -39% and -34% respectively with 5°F warmer conditions than a year ago (a significant change on a monthly level). 

Nationally, snowfall was down -22% vs. a year ago January (9^th snowiest of the past 17 years) and -6% below average.   These milder and less snowy trends across the Northern U.S. were certainly a plus for overall retail industry SSS and while the stormy weather in the South would ordinarily be a negative it actually spurred strong sales for Winter seasonal merchandise with “panic” buying for storm related merchandise and pantry loading items.  The chart below shows a day-by-day summary of the extreme record breaking cold early in the month followed by a big January thaw warm-up.  CLICK ON CHART FOR LARGER VIEW

“The most important and statistically significant factors for stronger retail sales performance in January are the consumer confidence index followed closely by less severe weather,” said Bill Kirk, CEO Weather Trends International.  Last year the January index was at an all time low (38) which in part explains the disastrous retail SSS results of -4.8% according to ICSC’s tally of 60 major retailers vs. this year’s confidence index of 53.  While 53 is nothing to get too excited about (90 is a strong index indicating a strong economy) it’s still better than last year and combined with the more favorable weather trends retailers should post gains in-line to higher than expected when results are announced Thursday, February 4^th.  Over the past 25 years a stronger than expected December (December 2009 brought very strong industry gains of +3.6% according to ICSC) is followed by a stronger than expected January 82% of cases so the math suggests more retailers will again be in positive territory!

 For a complete business-weather roundup click on the links below for a detailed PDF summary report:

U.S. January 2010 Retail Business Weather Summary Report

U.K. January 2010 Retail Business-Weather Summary Report

G-20 January 2010 Retail Business-Weather Summary Report

Posted by Bill Kirk, CEO

At 7:30am EST this morning Pennsylvania’s Groudhog weather prognosticator apparently saw his shadow predicting 6 more weeks of Winter.  Sounds like Climate Gate 2 or he needs to get his eyes checked as the official weather observations showed completely overcast skies in Punxsutawney, PA this morning!  Hmmm?  He is 123 years old so the legend has it so I’m sticking with the bad eyes bit!  Or, maybe its all the media camera lights that created the shadow which in part explains why the rodent has predicted 6-more weeks of winter in 10 of the past 11 years.  Over 12,000 people from as far away as Chile mobbed the small town of just 5,944 permanent residents to see the rodent this morning.  PETA was there too suggesting animal cruelty but this glorified squirrel is living the good life to say the least.

But, for what it’s worth our year-ahead forecast would agree with the rodent this go around and our crack marketing team says that 9 out of 10 groundhogs use Weather Trends before making their predictions!

Weather Trends International has been advising clients for over a year now that late Winter into Spring would present a lot of challenges with a cold, wet and snowy start to February and similar trends until late March followed by more cold and wet through May.  Late March early April looks to be the first strong taste of Spring so Phil is most likely right this go around!