Global warming has coat makers sweating, to the tune of $10 million US per season.
Last October, gearing up for the pitch of the pre-Christmas winterwear season, Weatherproof Garment Co. president Freddie Stollmack and chief executive Eliot Peyser decided that after 2006 — the warmest year on record in the U.S. — they needed to insure their coat sales against 15 C December days.
They called in Storm Exchange Inc., which offers a “weather hedge” against unseasonal temperatures.
“It literally pays if the weather is bad,” said Storm Exchange chief strategy officer Paul Walsh. “We put a value on the changing weather in relationship to sales.”
Weatherproof deemed the winter weather risk to its sales to be up to $10 million. If temperatures throughout November and December, the prime full-price retail season, rose a certain amount above average, Storm Exchange would have to start paying up.
“The problem nowadays is that the weather is variable from week to week,” said Walsh. “The only way they can (manage) is to put in place a financial hedge.”