Just as the economy seems to be recovering, Mother Nature keeps dumping on retailing.
This story first appeared in the February 3, 2011 issue of WWD. Subscribe Today.
There’s been about a storm a week since New Year’s, but the latest on Tuesday and Wednesday was the worst, blanketing much of the Midwest, Northeast and South and forcing retailers to curtail operations or not open at all.
On Wednesday afternoon, Wal-Mart Stores Inc. reported 50 stores closed; Target Corp. said 81 stores closed early Tuesday and 13 were still closed Wednesday afternoon, and Macy’s Inc. said 29 Macy’s, two Bloomingdale’s and two distribution centers were closed Wednesday. On Tuesday, Texas and Oklahoma saw over a foot of snow, and Illinois was hit even worse Wednesday with around 2 feet of snow.
Retailers say this year’s severe weather took a toll on January comparable-store sales, which will be reported today and are expected to see low single-digit gains on average. However, January is a low-volume month when retailers transition from winter to spring fashion, and some retailers and analysts think there’s pent-up demand for clothing and accessories that will only grow as the weather warms up and Easter approaches.
“Clearly this extreme weather, which is setting records, has got to have an effect,” said Barbara Kahn, director of the Jay H. Baker Retailing Center at the Wharton School of the University of Pennsylvania. “For sure it’s affected in-store sales, perhaps not so much online.”
With the strong stock market, momentum in the manufacturing sector and some indices indicating an uptick in consumer confidence, “people will be excited about returning to shopping,” though the sluggish housing market, high unemployment and rising gas prices remain strong concerns, said Kahn.
“The weather played a role in January, but January is the lowest consumption month, so if you had to have weather problems, January is when you want them,” said one department store head.
Retailers are hoping for some momentum as soon as this weekend, with Valentine’s Day promotions, but there’s been damage done. “Obviously, between today and yesterday there were a lot of stores that had virtually no business,” said retail analyst Walter Loeb.
But he added that Easter falling later this year, on April 24, works in favor of retailers, giving them time to catch up on spring selling. “There will be strong sales during pre-Easter selling. Spring fashion will be very heavily promoted in April. March will be more about home furnishings,” Loeb said.
“Winter storms on the East Coast likely result in disappointing same-store sales in January for most retailers as consumers mainly picked through lean clearance levels and ignored full-price spring product,” Christine Chen, a principal at Needham & Co. for equity research for specialty retail and apparel, wrote in a report. “Traffic in January slowed as the absence of urgency and continued clearance promotions failed to excite customers.…Given that January is the smallest month of the fourth quarter, representing 15 to 20 percent of the period’s volume, we do not think that lackluster results will negatively impact fourth-quarter earnings per share guidance, but upside surprises are now unlikely.”
Chicago was bracing for subzero cold today, after encountering its third biggest snowstorm of all time — some 20 inches that closed Lake Shore Drive. Drifts in some areas were 4 feet and higher, burying vehicles.
Sarah Burrows, marketing manager of 900 Shops at 900 North Michigan Avenue, said the center, which houses some 70 stores including Bloomingdale’s, closed two hours early at 5 p.m. Tuesday and stayed closed Wednesday, marking only the second time it’s been closed since its 1988 opening. The first time was Sept. 11, 2001. Stores were also closed at nearby Water Tower Place, at The Shops at North Bridge and along Oak Street.
According to Steve Siegler, president of J. McLaughlin, when bad weather keeps customers at home and forces stores to curtail operations, “You never catch up entirely. There are just not as many hours to shop. I never like to use the weather as an excuse, but when you have an ice storm during the night, your day will start off very slowly.” As far as January’s business, “it’s not a wipeout,” Siegler said. “We exceeded our plan,” largely due to stores in warmer climates like Florida.
Stephen Sadove, chairman and chief executive officer of Saks Inc., said the Dallas, St. Louis and Tulsa stores did not open on Wednesday and that a handful of stores were closed early Tuesday and opened late Wednesday in the Midwest and Northeast.
“There is a two-edged sword to this,” observed Jim Sluzewski, Macy’s corporate spokesman. “Once people can get out on the road after being cooped up, the mall is one of the first places they go. It’s warm.”
Roads were so thoroughly iced in the Dallas-Fort Worth area Tuesday that virtually all schools were closed, residents were advised not to drive, and many businesses stayed shut, including the Dallas Market Center campus. It was especially bad timing since the area is flooded with visitors and media for the Super Bowl on Sunday. Roads improved Wednesday, but most schools remained closed and businesses were still affected.
At NorthPark Center, Dillard’s, Macy’s and Nordstrom all opened late Tuesday and only about 60 percent of the inline shops were able to do business, said a spokeswoman. About 80 to 85 percent of the stores opened Wednesday and consumer traffic improved, she added. About 75 percent of the stores opened at Galleria Dallas on Tuesday excluding Saks, and the mall closed early at 5 p.m., said general manager Angie Freed. A similar percentage of retailers opened Wednesday, but periodic 10-minute blackouts hampered business.
Eight Neiman Marcus stores were closed either Tuesday or Wednesday, and seven others had delayed openings, according to Ginger Reeder, vice president and spokeswoman.
Boston declared a snow emergency Tuesday when 6.8 inches of snow fell and 3 to 6 more inches were expected Wednesday. All public schools were closed Wednesday. However, the Shops at the Prudential Center was open both days. “Everybody opened,” said a spokeswoman for the center. “We’re used to it. We have our own T stop and we have 1,200 residents on site. We have a very strong and immediately accessible customer base. When we have nasty weather, we are extremely busy.”