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Warm Weather Wrecking Outerwear Sales

Women’s Wear Daily

By: Arthur Zaczkiewicz

Blame it on the weather.

So far this fall season, there have been above-average temperature trends across most of the U.S. and significantly less snow cover for the Plains States and the Northeast, according to the National Oceanic and Atmospheric Administration.

Although winter officially begins next Tuesday, Dec. 22, the warming trend is likely to continue for weeks to come, according to Weather Trends International, which notes that this past November was the warmest in 24 years while this month is shaping up to be the warmest in nine years.

The warm weather is also adding up to millions in lost sales.

Weather data analysts at Planalytics said weather-driven demand and sales for outerwear were significantly down for the week ended Dec. 12. The firm said outerwear sales in markets such as New York and Philadelphia were down 36 percent and 38 percent, respectively, while Nashville was off 35 percent and Chicago was down 34 percent. Boston was down 31 percent and Atlanta and Houston were off 35 percent and 18 percent, respectively.

For specialty apparel retailers, weather had a strong impact on November sales. Unseasonably cooler temperatures in the Southwest Coast area (including Los Angeles), for example, pushed up sales during the month at specialty apparel stores by $72 million, Planalytics said. However, sales in the sector were off by $41 million in the Northeast and $83 million in the Eastern North Central region. Overall, the analytics firm said the weather impact on specialty stores for November totaled $185 million — which is steeper than the $166 million shortfall originally forecast by the company.

The lack of “sweater weather” is triggering steep markdowns in outerwear as well as subsegments such as sweaters, fleece, scarfs and gloves, analysts noted, adding that they expect retailers to unload piles of outerwear at steep discounts come January. Still, there are winning brands. Craig R. Johnson, president of Customer Growth Partners, previously said the premium market continues to do well as outerwear from brands such as Canada Goose and Moncler trumps the warmer temperatures. For most outerwear companies, though, warm weather is bad news.

Corinna L. Freedman, equity analyst at BB&T Capital Markets, said outerwear “has been much slower-moving [as compared to other segments] and we note incrementally deeper outerwear markdowns, particularly in the department store channel, which is now running 50 to 60 percent off,” Freedman said adding that as a result she has lowered her earnings per share estimates for VF Corp. and Columbia Sportswear Co. by one cent each. The analyst expects “modestly lower top-line” fourth-quarter results for both companies.

“We believe outerwear markdowns may get even deeper, given the outlook for continued warmth across much of the U.S. for the second half of December,” Freedman said. The analyst said Dick’s Sporting Goods “offered more promotions on [The North Face] and Columbia outerwear compared to a week ago, and included $25 Dick’s cash when spending $149 to $300 on The North Face outerwear, accessories, and boots.”

Matthew Boss, equity analyst at J.P. Morgan, said the warmer weather this holiday shopping season is “on the heels of the warmest [back-to-school season] in four years and a November many retailers would like to forget.” Boss said the warming trend this month will likely result in “elevated promotional activity and excess clearance into January, in our view.”

The plot twist, Boss noted, is that Weather Trends International, which specializes in long-term forecasting, expects a “colder and wetter ‘out-of-sync’ spring weather pattern through May.” That means cold, icy rain and perhaps even snow in May of 2016, which Boss said can “reduce purchases of seasonal spring apparel.” It also makes for a challenging year-over-year comparison as last May was the second-hottest in 120-plus years in the Northeast.

 

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