SOURCE: Storm Exchange

October 09, 2008 09:51 ET

Fall Retail Sales to Get Boost From Weather According to Storm Exchange Retail Outlook for October - December 2008

Favorable 'Sweater Weather' in Key US Cities Projected to Add Up to 125 Basis Points to October Same Store Sales; Outlook Is Less Optimistic for Holiday Season

NEW YORK, NY--(Marketwire - October 9, 2008) - Storm Exchange, Inc., a market leader in weather risk management services, today released its Retail Weather Risk Outlook for October to December 2008. Based on a combination of atmospheric climate trends, advanced computer-driven seasonal prediction models and analog forecasts, the Storm Exchange outlook projects that cooler October weather in key US cities will add between 50 and 125 basis points to aggregate same store sales growth.

Citing a 90% probability of cooler year-over-year temperatures in the Midwest and Northeast this October, the Storm Exchange Retail Weather Risk Outlook suggests that the increased need for fall merchandise will drive incremental same store sales increases in spite of the current macroeconomic environment. Storm Exchange analysis of the historical correlation between temperature and retail sales has found that for every 1 degree (F) change in temperature in October, same store sales (excluding mass merchandisers) increase/decrease by approximately 17 basis points.

"Cold temperatures are a critical driver of consumer shopping behavior in September and October," said Paul Walsh, Storm Exchange Chief Strategy Officer. "Early in the fall, consumers tend to think less about the economy and more about personal comfort when they start seeing their breath. October sales should reflect that, particularly if savvy retailers seize the opportunity to target their promotional efforts around this prime 'sweater weather' shopping season."

This favorable relationship between cooler temperatures and increased consumer spending is likely to wane in November and December, as buying impulse gives way to economic reality. According to the Storm Exchange Retail Outlook, the relationship between weather and total retail sales in November and December is much weaker than that in October. Storm Exchange cautions that a combination of overbuying in October, the impact of the faltering economy and more neutral November weather may lead to weaker retail performance in the key holiday shopping months.

Storm Exchange produces their seasonal Weather Risk Outlooks to provide businesses with statistical probabilities of adverse weather conditions on a regional basis.

The Storm Exchange Retail Weather Risk Outlook for October to December 2008 breaks out projected retail sales estimates on an aggregate and city-by-city basis. The city-level analysis is based upon intelligence produced by the company's new weekly regional planner which allows retailers and investors to anticipate weekly trend changes in temperature to target marketing and investment decisions.

About Storm Exchange, Inc.

Storm Exchange provides weather-related financial and information services in the language that corporations and investors understand best: the bottom line.

Storm Exchange helps corporations improve performance by enabling them to identify, measure, manage and hedge the impact of weather on income and expenses. For investors, traders and insurers, the company delivers information solutions that enable them to understand and anticipate how weather impacts investment and underwriting performance.

Storm Exchange solutions focus on the business context and financial relevance behind the weather. Services include media, industry-specific intelligence, correlation models, proprietary analytics, forecasting tools, and weather hedge solutions. These services, many of which are available on leading information platforms such as Bloomberg, address the fundamental drivers of financial performance that result from exposures to precipitation, wind, temperature and other climate variables.

Storm Exchange is headquartered in New York and operates a weather research center in State College, PA. The company is backed by leading private equity investors Venrock Associates and RRE Ventures.

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    John Roderick
    J. Roderick, Inc.
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