I had a few folks comment that my last post was perhaps the most negative that they had seen on Making Cents (given my tendency to try to find the silver lining in most cloudy situations), but remember, I was quoting Bill Kirk who is the CEO of Weather Trends International. I did so because Bill and the folks at WTI have an amazingly accurate track record of forecasting retail sales based on their weather models.
So after the February retail report actually showed same-store retail sales actually INCREASED by 3.7%, I emailed Bill the following:
After your persuasive post on the downward expectations on February SSS sales due to snowmageddon conditions, I’ve been checking the SSS reports released today (from ICSC and others) which seem to indicate a 4% increase for the month, which is actually higher than the 2-3% Wall Street expectations. Is this correct? If so, given your excellent track record, is this just one you missed this time?
Thanks for your input,
As usual, Bill is always prompt in returning comments on WTI forecasts and he emailed back with the following reply:
Good morning. Retailers for the most part were all well above expectations but many did comment that the record snow cost them 1% to 2% in lost sales. Bottom line, they overcame the 9 major hurdles but they were up against the easiest February comp ever last year which was -4.3% so the +3.7% gain captured most but not all of last year’s huge losses. The expectations for March have been set very low at +2.5% by Wall Street but with the first major Spring surge of warm weather late month around Easter, retailers are poised for a blow out month with exceptional sales gains well above expectations. Why? Because they’ve had two back-to-back really bad March sales in 2008 = -2.3% and last year -5.1% due in large part to cold/snowy weather around Easter the past two years. Net-net we missed this one but Wall Street was surprised by the prior 2 strong months so we’re still up on the street!
I agree. I still hold a great deal of respect and will continue to follow the weather-based retail modeling by WTI (and others) because they represent one more layer of information to help us all in making more informed managerial decisions. Just goes to show that its hard for anyone who’s brave enough to do some forecasting to get it right 100% of the time!
That being said, I do agree with Bill that expectations for March are OPTIMISTIC given the level of “pent-up demand” that is generally being touted in the marketplace. Again, last spring was pretty good given the circumstances and with the industry going into this spring with consumer confidence a lot higher than last year; the Conference Board’s leading economic indicator index having increased for the 10th straight month; and the latest job market report mostly positive, I feel we are positioned about as well as we could be going into the spring season.
All that is left to do now is to put our best differentiated foot forward and make sure that we not only exceed consumer expectations, but delight them in the process!