On the other hand, the Market Vectors Retail ETF (NYSEArca: RTH), which targets the largest retailers in the space, gained 12.1% year-to-date.
Bernhardt argues that retailers are suffering from slower sales this year as major population centers in the eastern two-thirds of the U.S. are on track to post record high temperatures for the last two months of the year. Consequently, retailers will be forced to slash prices on winter goods to get rid of excess inventory.
“They’ll be practically giving it away, but they’ll clear it,” Bernhardt added. “The level of markdown that you’re going to see … we haven’t seen that in a very long time.”
Looking ahead toward the spring season, El Nino is expected to create cooler conditions across the southern third of the U.S. and more stormy conditions in the northern third.
“Combined with an early Easter, this means the start to spring buying will likely be delayed in the areas that traditionally sees the earliest start of spring,” Paul Walsh, vice president of weather strategy at The Weather Company, told CNBC. “I’m not very bullish on the weather for the start to spring.”
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Max Chen contributed to this article.