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Weather and retail sales report

March 12, 2009 by Charlie

Despite the economy going into a tail spin, retail industry same-store sales were on the high side of expectations (-0.1% vs expectations of -1% to -2%) and in many cases exceeded expectations, especially Wal-Mart which blew away it’s own expectations with a +5.1% gain.

There was some discussion that lower gasoline prices helped the industry but an analysis reveals that’s most likely not the reason for the stronger gains. As the chart below shows, gasoline prices have steadily risen by $0.27 gallon from December to February so that certainly didn’t help boost disposable income. Unemployment went from 7.2% to 8.1% so that didn’t help retailers any. So what was difference from the earlier Winter months when retail sales were the worst in decades to the better February? MUCH BETTER WEATHER!

In December we had a slew of negatives for retailers with the coldest conditions in 8 years, 2nd wettest in 16+ years and snowiest in 20+ years with the snowiest week prior to Christmas in over 100 years resulting in the worst retail sales ever despite easy comparisons to a year ago. Yet unemployment was lower than February and gas prices much lower than February so it was all about the weather creating the PERFECT STORM for the abysmal industry results.

Then came January which had a few more positives but cold and snow was still extreme and despite worse unemployment, higher gas prices retail sales were not as bad December and higher than expected.

Then there’s February – much worse unemployment, worst stock market plunge since the Depression, $0.27 gallon higher gas prices than December and very tough comparisons to a year ago retail sales, yet the industry comes in much higher than expected? Why? Maybe consumers felt a bit of Spring in the air with 1,581 new record high temperatures, warmest February in 4 years, least snow in 7 years and driest in 13 years? All very favorable trends for higher store traffic and higher retail sales. Click on chart below to enlarge.

Filed Under: News Tagged With: retail sector

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