April 2009: Post facto analysis of the influence of weather on consumer demand/retail sales May 2009: forecast of the expected impact of weather on consumer demand/retail sales

1. Influence of Weather on April 2009 Consumer
Demand and the May 2009 Outlook

2. April 2009 Summary Analysis
• In April 2009 weather had a mixed impact on consumer demand
trends and retail sales
• Specialty Apparel/Department Store Retailers: weather a marginal
net negative. Cold weather prior to the Easter holiday negatively
impacted demand for holiday and spring apparel. Uber-buy-now
consumer holding out to purchase seasonal merchandise until the
weather is truly seasonal -- this would have exacerbated the negative
impact on spring apparel during pre-Easter sales period. Warm/hot
weather late in the month a positive but offset by the unfavorable
weather environment prior to the Easter holiday.
• Home Centers and Mass Merchants: weather a net positive. Cold
weather prior to Easter less of an impact on this sector and likely
more than offset by the extreme warmth during Week 3 and 4. April 2009 Temperature Compared to Normal
Demand for relatively inelastic outdoor/lawn and garden products Map Source: NOAA
VERY strong during the second half of the month. Also, summer-like
weather during this period likely robbed mall-based retailers of crucial
traffic, particularly during the weekend of the 24th across the east and
northeast.
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3. Weather Impact on April Sales
Temperature a Key Ingredient
• Example of the influence of
temperature on retail sales in
April
• National temperature change
against the average comp store
sales of a basket of 53 retailers
(source: Global Hunter Securities
and NOAA)
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4. April 2009 Compared to April 2008
Similar Monthly Patterns
April 2008 April 2009
Temperature Compared to Normal Temperature Compared to Normal
Map Source: NOAA Map Source: NOAA
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5. April 2009 Weekly Temperatures
Cold Easter Week; Hot the Last Week
April Week 1 April Week 2 April Week 3 April Week 4
Easter Week Weekending 4/18/09 Weekending 4/25/09 Weekending 5/2/09
Weekending 4/11/09 ICSC Chain Store Sales ICSC Chain Store Sales ICSC Chain Store Sales
ICSC Chain Store Sales Change from 2008: -.1% Change from 2008: -1.7% Change from 2008: +.7%
Change from 2008: -.4%
Maps Indicate Temperature Compared to the 30-Year Normal (By Location)
Map Source: NOAA
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6. April 2009 Daily Temperatures
Chicago and New York City
Late month surge in spring
demand; strongly positive impact
on Home Center/Mass Merchant
sector sales
3-day moving average
Colder than normal
Colder than normal
early; negatively
early; negatively
impacting Easter/
impacting Easter/
Spring merchandise
Spring merchandise
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7. May 2009 Outlook
Weather Influence on Consumer Demand/Retail Sales
National Weather Service forecast through May 19th:
orange colors represent high probabilities of warmer
than normal temperatures.
• In May 2009 weather will have a strongly positive impact on
consumer demand trends and retail sales
• Specialty Apparel/Department Store Retailers: weather a net
positive. An easy comparison to very cold weather in May of
2008 combined with warmer than normal weather across a large
section of the US will drive much stronger demand for spring and
summer seasonal apparel. This effect will be enhanced by pent-
up demand following a long stretch of cool and rainy weather in
early May across most of the eastern US.
• Home Centers and Mass Merchants: weather a net positive.
Same reasoning as above. Additionally, rainy weather in early
May will result in continued enhanced need-based demand for
lawn and garden and outdoor items across the heavily populated
regions in the east and Midwest.
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8. May 2008 Comparative Environment
Cold/Wet Weather + High Gas Prices Strongly Negative
May
2008
Early
May
2009
At a macro-level, May sales are typically highly correlated to warmer and
drier than normal conditions.
In 2008, colder and wetter than normal weather, combined with high (and
getting higher) gas prices resulted in a very challenging sales environment.
For May 2009, the comparison results in a much improved environment for
spring sales (even considering the economic headwinds) and bodes well for
potential upside surprise in retail sales – particularly given the outlook for
warmer than normal temperatures through the middle of the month.
Map sources: weather maps, www.ncdc.noaa.gov ; historical gas prices, www.gasbuddy.com
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9. Questions/Contact Information
Paul Walsh, Managing Principal
– Email: Paul.Walsh@g2weather.com
– Direct: +1.917.463.4238
– Mobile: +1.610.246.0623
© Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC