Retailers, Designers Feel Winter’s Wrath

Winter Storm Pax brought the southeastern U.S. to a virtual standstill Wednesday — and threatened to disrupt Thursday’s shows during New York Fashion Week.

Downtown Atlanta

Winter just won’t let up — and retailers are going to suffer the consequences.

This story first appeared in the February 13, 2014 issue of WWD.  Subscribe Today.

Winter Storm Pax brought the southeastern U.S. to a virtual standstill Wednesday — and threatened to disrupt Thursday’s shows during the last day of New York Fashion Week as it headed up the East Coast. Scheduled for Thursday are shows for companies including Ralph Lauren, Calvin Klein, J.Mendel and Marc Jacobs, which were all moving full-steam ahead with their plans late Wednesday. Updates on shows will be communicated via the Council of Fashion Designers of America through cfda.com as well as on its Twitter feed and Facebook page.

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Meanwhile, retailers were counting the cost of this endless winter, which some observers predicted could be in the billions. They also were hoping the weather gets better for the three-day Presidents’ Day weekend, a key tipping point in spring selling.

“From an overall merchandise standpoint, the weather is going to be a store traffic killer today, tomorrow and Friday,” said Evan Gold, senior vice president of weather advisory firm Planalytics. The weather will hamper sales of Valentine’s Day merchandise in the South and in the Northeast, where large amounts of snow will make it difficult for consumers to leave the house. “By Presidents’ Day it might clear up, but the question is: Can people get out?”

Retailers will take a collective hit in the billions of dollars, Gold said. “It will be similar to what we saw with the polar vortex when we estimated a $5 billion loss based on the fact that people couldn’t get out,” he said.

Marshal Cohen, chief industry analyst at The NPD Group, said, “The weather does take a toll” on retail sales. “It will provide a challenge for retailers to make up for lost time. Retailers who try to rush to the next season have been faced with the reality that consumers buy now and wear now.”

Gold agreed that most winter goods have been cleaned out. He said that next week, temperatures will be unseasonably warm. “Spring will be full-price selling,” he said, adding, “I’m not saying it’s going to sustain itself.”

Susan Anderson, vice president and analyst at FBR Capital Markets, said, “February is generally the smallest month of the first quarter for retailers, but after a bad January and a bad start to February with spring product, there isn’t a lot being sold — perhaps some leftover clearance merchandise, but that’s not great for margins. This could lead to a promotional first quarter after a very promotional end to last year.”

She said that, even after marking goods down in January, stores were grappling with inventories that were “still a bit high.”

“It seems like the whole month’s been pretty horrible for the East Coast,” she said. “A storm might help if people can get to the malls, but there could be power issues as well. And people who are stuck indoors might be inclined to go online — Gap has reported e-commerce increases during a storm period — but not if they’re left without power.”

For retailers generally, “The Internet is as much as 10 percent of the total business. It can’t come close to turning the Richter scale,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon. “The weather has become the major stumbling block over the last couple of weeks.”

Stores throughout the southeastern U.S. were closed Wednesday. As for fashion week in New York, an IMG spokesman reiterated the company’s statement from last week, which said in part: “The safety of all attending and participating in Mercedes-Benz Fashion Week is our top priority, and after careful review of weather conditions with city officials and the CFDA, we plan to move forward with all shows as scheduled. We will continue to evaluate new developments in partnership with city officials and the CFDA.”

The spokesman added that everything is still going on as planned on Thursday, and he’s been in close communication with designers, the CFDA and city officials. He said IMG will keep everyone posted if anything changes.

Steven Kolb, chief executive officer of the CFDA, said that the designers will monitor their shows on their own.

Even if shows go on in New York Thursday, the issue will be the travel conditions that day and Friday, when many buyers and editors are due to fly to London for fashion week there, which runs through Tuesday. “The show must go on! We wouldn’t delay the start of LFW, however I would certainly create a LFW Day One Highlights package for any editor that missed the first day. This would include show videos and images from any events that took place, announcements and facts and figures so media were kept informed with what went on on Day One of London Fashion Week,” said Kimberly Carroll, international p.r. manager at the British Fashion Council.

In the Atlanta region, many shopping malls were closed Wednesday. Eight Simon Property Group centers in Atlanta, including Phipps Plaza, Lenox Square and Northlake, were closed Wednesday as a result of the weather. General Growth Properties’ Perimeter Mall in Atlanta was also shut.

Simon said six malls are planning to delay opening on Thursday until noon. The mall operator also said centers in South Carolina and North Carolina were closed part of or all day Wednesday.

Among the retailers with a major presence in the path of this week’s storm are Macy’s, J.C. Penney, Dillard’s, Wal-Mart, Target and Belk.

More than 85 Target stores were closed on Wednesday. “Unfortunately, this winter just won’t quit,” said a spokesman.

“It’s fluctuating as the storm moves through,” said a Wal-Mart spokeswoman about store closures. On Wednesday morning, 30 stores were impacted, but by 6 p.m., 150 units were closed in Georgia, South Carolina and North Carolina.

At J.C. Penney, “As a result of winter weather in the southeast, approximately 20 of our locations closed early yesterday and two were closed all day,” said a spokesman. Meanwhile, 23 Macy’s and one Bloomingdale’s in Georgia and South Carolina were shuttered on Wednesday. Neiman Marcus said two stores, in Atlanta and Charlotte, N.C., remained closed Wednesday.

The brutal weather that’s been pounding the country this year has stifled spring selling so far, though retail and mall executives noted that February is not a major volume month and that spring doesn’t really start to take off until late in the month and March. Still, Presidents’ Day weekend is a huge sales event across the country, representing a big test where retailers look for a spike in business and get a read on the consumer mind-set for spring. Presidents’ Day is Monday.

Retailers have virtually completed their clearances of winter merchandise and are almost if not entirely converted to spring.

“This is a wipeout,” wailed Kathryn Bufano, president and chief merchandising officer of Belk Inc., based in Charlotte. “Our offices are closed today. It looks like the north outside. The storm is supposed to continue all night” with a mix of snow and ice, she added.

Bufano said Belk had about 25 stores including Alabama, Arkansas and Mississippi that didn’t open Tuesday, and the majority of the Belk chain closed early Tuesday. “The volume pretty much dropped in half,” Bufano said.

Asked about the weather this year and it’s impact on spring, Bufano said, “For us to be continually below freezing is unusual. It’s taking a heavy, heavy toll.”

While the polar conditions have diminished the will to buy spring fashion, Bufano did say some products were selling when there were breaks in the weather. “We just launched a new private brand in sportswear called Crown & Ivy, a better, preppy, clean kind of line and we got huge checks the minute it hit,” Bufano said. “The other interesting thing is that our e-commerce is good for the whole month of February but it doesn’t make up for 95 percent of what we lost [in the stores]…The whole month of February has not been great.”