My family had a Fiji holiday to escape the Melbourne winter. The island nation disappointed with several rainy days and windy conditions on our nine-day trip. Low temperatures on some days made swimming with the kids an icy challenge. 
We still had a great trip, but the weather influenced our spending. We spent more time on rainy days at the resort and less elsewhere in Fiji or its outer islands. Business at the resort, with its pricey menus, was brisk. Local tour operators said their business was soft due to the weather.
It was another reminder of the weather’s influence on retailers and hospitality businesses. A colder-than-usual winter can drive shoppers into stores for warm clothing and encourage people to stay at home. Just as a prolonged summer boosts soft-drink, ice-cream and beer sales.
Agriculture stocks are other obvious winners and losers from weather patterns. (Look out of more on agriculture stocks in this column next month). The weather’s influence on Australian retailing this year has been stark. A delayed start to our winter led to many retailers bringing forward their end-of-financial-year sales. Who would want to sell ski gear, puffy jackets and other winter wear when the weather is milder than usual? Or own a ski resort if the winter is mild and snow quality poor?
Of course, second-guessing future weather patterns, and basing investment decisions solely on them, is foolish. So too is avoiding stocks based on climate-change forecasts, unless, of course, one has strong convictions about ethical investing and owning fossil-fuel-related companies.
Several coal stocks, here and overseas, have rallied this year, despite gloom about the coal industry’s future, amid climate-change debate. I’m not suggesting readers buy coal stocks, but it’s another example of the dangers of reading too much into top-down trends and overlooking valuations.
Nevertheless, the weather is an important consideration for companies whose earnings are directly affected by the timing and duration of seasons. Active investors must consider the weather’s impact on company earnings, particularly when it differs from previous seasons.
Macquarie Group recently released an interesting research note on the weather’s impact on equity strategy. The investment bank noted that January to May 2018 had been unseasonably warm and dry. Most major capital cities recorded lower-than-usual rainfall.
The Bureau of Meteorology’s winter outlook, released in late May, predicted below-average rainfall for the East Coast and parts of South Australia and Western Australia. A warmer-than-average winter, not good for retailers, is expected.
A drier-than-usual summer and winter has implications for several ASX-listed stocks and their full-year earnings, to be reported in August. 
Underperforming department store Myer Holdings might struggle to meet market earnings expectations. Like other retailers, Myer noted the delayed start to winter this year. A rebound in department store sales in May, announced this week, might help, but Myer is best avoided.
Chart 1: Myer HoldingsSource: The Bull
Adventure-wear provider Kathmandu Holdings, a small-cap favourite of this columnist, is another leveraged to winter conditions. 
The well-run retailer, known for warm clothing, has done a good job of diversifying its seasonal product range. A warmer, drier summer probably helped its sales of hiking gear and light clothing, but I can’t see Kathmandu trouncing market expectations again this year, given the slow start to winter and heavy sales discounting.
Chart 2: KathmanduSource: The Bull
Super Retail Group could be another winner from the summer conditions. The company’s Rebel Sport and Boating Camping Fishing divisions are beneficiaries of drier weather that encourages people to go outdoors and exercise. 
Super Retail’s winter-focused Macpac business could offset the gains, but the company remains one to watch in this year’s reporting season.
Chart 3: Super Retail GroupSource: The Bull
Coca-Cola Amatil (CCL) is another winner from the warmer summer. I have become more bullish on the soft-drink manufacturer this year on valuations grounds. 
After peaking just above $15 in early 2013, Coke has tumbled to $9.37. Lower earnings growth and profit downgrades have crunched the former star stock in recent years. 
Tough industry conditions, health-conscious consumers, a growing public backlash against high sugar consumption, and lacklustre marketing and product innovation have also hurt CCL.
At the current valuation, the market is factoring a lot of bad news into CCL. The soft-drink industry is unattractive (as consumers move away from sugary drinks), profit margins are contracting and there is growing regulatory risk (through a possible sugar tax). 
A warmer, drier summer, at least, provides short-term relief for CCL through higher beverage sales.
Chart 4: Coca-Cola AmatilSource: The Bull
Theme-park operator Village Roadshow is also affected by the weather. Village downgraded earnings this year, noting lower attendances at its Gold Coast theme parks because of this year’s Commonwealth Games and a wet March. 
However, weather in summer and autumn on the Gold Coast was much drier than usual, suggesting Village might have experienced a rebound in theme-park attendance in the past few months. A milder winter should also help theme-park sales.
Chart 5: Village RoadshowSource: The Bull
On balance, in this earnings season beware retailers that depend heavily on winter-related sales. And watch for companies that sell more goods when the weather is warm. 
Regardless of one’s view on climate change, many parts of Australia have experienced unseasonably warmer and drier weather by historical standards – a pattern that should have a bigger weighting in investment decisions in weather-influenced companies.

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• Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs. Before acting on information in this article consider its appropriateness and accuracy, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at July 3, 2018.