That Warm Weather You Like Is Costing Retailers Hundreds of Millions

December 16, 2015, 7:01 PM UTC
Shoppers At Macy's Flagship Store
Pedestrians walk past Macy's Inc. flagship store in New York, U.S., on Thursday, Nov. 29, 2013. Terry Lundgren, president and chief executive officer of Macy's Inc., said 15,000 shoppers waited to enter its Herald Square store in New York at 8 p.m. last night, up from 11,000 at midnight a year earlier. Photographer: Peter Foley/Bloomberg via Getty Images
Photograph by Peter Foley — Bloomberg via Getty Images

The long-term forecast calls for temperatures around 66 degrees Fahrenheit on Christmas Eve in New York.

Many people welcome that kind of weather, which will be prevalent across the Eastern half of the country and marks a continuation of an unusually warm autumn in big swathes of the U.S.

But it is the stuff of nightmares for countless retail CEOs.

This kind of weather typically leads shoppers to postpone purchases of winter coats and boots, potentially leading customers to decide to forego buying new winter clothes altogether until next year. And that means stores will be stuck with unwanted merchandise they could end up selling at clearance prices in January, adding to pressure on profit margins at a time when big chains are spending a ton on e-commerce to compete with (AMZN)

Sales of women’s boots, a major category for stores like Macy’s, (M), Kohl’s (KSS), and J.C. Penney, (JCP), fell 13% across the United States in the week ended December 12, according to Planalytics, a tracking firm that advises 250 retailers on planning for weather disruptions.

And sales of hats, scarves, and gloves fell 4% in the first half of December.

What’s more, Planalytics found that shopper traffic to specialty apparel stores in major cold-weather markets like Philadelphia, Boston, and Chicago fell 6%, 5%, and 4%, respectively, during that time.

The firm estimates that, so far this holiday season, apparel-only stores have already lost $343 million through December 12. And that tally doesn’t even include the department stores.

Speaking of those stores, the timing could not be worse. Coming off a tough, warm early autumn, stores like Macy’s, which has forecast a decline in sales this quarter, were banking on the holidays to make up some of that shortfall.

Last month, Macy’s CEO Terry Lundgren held out hope Mother Nature would co-operate. His counterpart at J.Crew, among many others, sounded a similar note.

“You want to believe that it eventually is going to get cold,” he told Wall Street analysts. “You’ll have to mark it down eventually because there is too much of the inventory.” He continued: “Our lumps are clearly in the cold weather category.” Lundgren said that on November 11. To his and his peers’ chagrin, the warm weather has continued almost unabated.

Planalytics says that this weekend—which includes Super Saturday, the biggest shopping day of the year—is expected to bring cooler weather, so retailers might get a bit of relief.

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“Temperatures will still be warmer than normal and last year in many locations but after the current warm-up, a cooler feel will emerge,” the firm said.

That, or expect really great deals on scarves and winter coats next months.

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