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Cowen Says Abnormally Warm Weather Risk on the Rise

The cold weather isn’t coming, it seems.

In a research note Monday, analysts at Cowen & Company said we could be looking at another set of abnormally warm weather and traffic has already taken a hit because of it.

Total U.S. retail traffic fell 10.6% in the first week of November, which also happened to be the warmest first week of November in more than 25 years. This time last year—when unseasonably warm weather destroyed fourth quarter sales and left retailers with a glut of inventory going into to 2016—traffic in the first week of November was down a lower 9.86%.

Traffic in October was down 4.6% and was 5.1% slower in September.

Looking specifically at apparel, traffic last week was down 8.71%, which Cowen said could have had to do with both the weather and Halloween.

Precipitation in the first week of November was down 50 percent year over year, while average temperatures were more than 31 degrees warmer year over year and nearly 8 degrees above normal.

Week two of the month may not fare all that much better either. Cowen said it expects traffic to be down between 3 percent and 5 percent, which would be less of a decline that last year’s 8.75%.

According to Weather Trends International (WTI), the second week of November will be the warmest in more than 10 years nationwide. On the West Coast, it will be the warmest in more than 25 years, the South will cool a bit from last week and the East Coast could see temps slightly cooler than last year.

While apparel traffic remains volatile, Cowen said October was a “decent” month but November’s weather forecasts are “a concern.”

The news for November puts Cowen’s September announcement that a colder year-end might boost apparel sales and that winter would come early and stay a while into question.

At the time, Cowen said December is more than 90 percent likely to be cold, allowing for cold weather apparel to be sold at full margin—which all remains to be seen considering temperatures haven’t yet cooled much.