Cold And Snow Kill UK Retail--US Next

The the Office for National Statistics said that retail sales in the UK fell 1.2% in December, more than the consensus forecast of .5%. The recession was partly to blame according to some analysts. But, cold weather and snow were the primary causes for the drop.

The US is likely to face a similar drop for the late January and February periods as retailers and the government begin to report numbers for the current month.The American retail industry is unlikely to be able to suffer a great blow from the weather after a holiday season in which sales were up from 2008 by a modest 2%. Large retailers are still faced with the prospects of downsizing to fit demand. Walmart (WMT) just closed 10 of its huge Sam’s Club outlets. Target (TGT) recently closed several stores. Before the stormy weather, Excess Space Retail Services projected that 6,000 to 8,000 retail outlets would close in the first half of 2010 unless holiday sales were unusually robust.

The weather will improve as the year moves into spring, but it is not clear that retail sales will. Unemployment is expected to stay above 10% for most of the balance of the year.  Consumers are still cutting back on their credit balances, and those consumers who want credit find that it is hard to come by as banks and card companies tighten their lending rules.

The snow if the US may be the end of the beginning of a long, hard winter for the retail industry.

Douglas A. McIntyre