BETHLEHEM, Pa., Aug. 9 /PRNewswire/ -- If you thought the weather was a bit unusual this July, you were not alone! The U.S. had the coolest July since 2004 with 89% of the U.S. trending colder than last year along with 898 record low temperatures set or tied during the month. Of those, 159 record low temperatures occurred during the important week of July 4th with temperatures in the 30s in the Great Lakes, 40s in the Northeast and 50s as far South as Texas and California. This has resulted in excess July inventories for hot categories like Air Conditioners, but helped other retailers get off to a good start for back-to-school season apparel categories. "Nationally, the number of hot days over 85 degrees F were down 12% vs last year, hot days over 90 degrees F were down 24% vs a year ago and really hot days over 100 degrees F were down a very significant 60% for the nation as a whole which explains the higher Summer inventories for items like air conditioners, fans, beverages, automotive batteries and other hot seasonal items" said Bill Kirk, CEO Weather Trends International. July 2006 was the 2nd hottest in 113 years with 2,300 record high temperatures set, so the change toward colder weather in the U.S. was significant. While the cooler weather was a benefit to apparel retailers, it was also a plus for consumers with energy bills lowered by 10% to 25%, especially in the South and East. Gasoline prices also trended down 5% vs a year ago, another plus, but food inflation was up 3.1% for the fastest pace in 15 years. This likely gave consumers a bit more discretionary spending with lower energy bills and in part explains why the back-to-school season is off to a much faster start than last year for apparel retailers according to research from the International Council of Shopping Centers. The ICSC survey showed 24% of households have already started their back-to-school shopping compared to only 12% July last year. Overall, retail same-store sales are expected to average a +3% gain when results are announced on Thursday, but that's still the 4th weakest gains in 22 years. This follows the worst Apr-Jun comp-sales growth in 22 years, so +3% will certainly be a bit of good news after comps of +2.4% in June, +2.5% in May and -1.9% in April.
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The unusual weather was not isolated to the U.S. as the G-20 countries showed the greatest change toward colder year-over-year weather in three years with extreme cool and wet weather around the globe. The U.K. had the coldest July in seven years but also the wettest start to Summer in at least 240 years which in part contributed to the very weak +1.2% like-for-like retail industry gains and the worst in 8 months. The cool trends were not limited to the Northern Hemisphere as Argentina showed the greatest July year-over-year change toward colder weather in over 100 years with the first snow in 89 years in Buenos Aires. France also showed the greatest year-over-year change toward colder July weather in decades. Asia and parts of Russia were the exception where the month trended slightly warmer and much drier than a year ago. The table below highlights the year-over-year changes in weather for the G-20.
For international companies that sell seasonal categories like carbonated soft drinks the impact on sales can be very significant. For every 1 degree F change toward colder weather, beverage sales trend down 1.2%. So, retailers will not be alone with weaker results as large beverage companies and other seasonal product manufacturers will also show weaker sales growth in light of July's temporary "global cooling."
About Weather Trends International:
Weather Trends International is the leader of actionable business-weather intelligence for retailers, manufacturers, pharmaceutical companies and agricultural firms whose product's sales are impacted by frequent changes in year-over-year weather conditions. Clients include Wal-Mart, ASDA, Kohl's, Bon-Ton, Gander Mountain, Johnson & Johnson, Anheuser-Busch, Sherwin Williams, Merrill Lynch and Citigroup among 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 forecasting methodology projects temperature, precipitation and snowfall trends by day/week, a year in advance for 3,931 cities in 129 countries with business strategy recommendations.
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