By: Jonathan Berr
Although record-low temperatures are making life miserable for tens of millions of people in the Northeast and Midwest, analysts say the icy conditions will fire up spending on winter apparel, snow-clearing gear and other seasonal items.
Apparel sales at specialty retailers are expected to surge $350 million in December compared with the same period last year when the weather was unseasonably warm, according to an estimate by Planalytics, which advises companies on how weather affects their businesses.
The Pennsylvania-based firm has already raised its sales outlook twice and thinks its forecast may prove to be conservative because sales were depressed from this fall’s unusually balmy temperatures, according to Evan Gold, Planalytics’ executive vice president for Global Services.
Burlington Stores (BURL), the parent company of the Burlington Coat Factory; Columbia Sportswear, a maker of outdoor apparel and boots; and VF Corp (VFC), which owns The North Face outerwear brand, are among the potential cold weather winners, according to a recent client report from Cowen retail analyst Oliver Chen. He added that consumers may still find bargains because inventory levels are high.
“Unfortunately, although [the] weather has been slightly cooler vs. last year in November — the cool periods have not been long enough and have not been that cold enough to help retailers offset election distraction in the [first half] of November,” Chen wrote.
Officials from Burlington and VF Corp didn’t respond to a request for comment for this story, while a spokesman for Columbia referred questions to its retail partners.
Planalytics expects sales of jackets to rise 6 percent, thermal underwear to surge 13 percent and winter boots to jump 14 percent. Snow removal products are projected to skyrocket 41 percent, with portable heaters rising 49 percent and ice-removal products to increase 76 percent. Planalytics sees sales of hot drinks such as coffee and tea rising 7 percent in December.
“That might not sound as much as, let’s say, snow shovels, but it’s probably actually a larger dollar volume,” Gold said, adding he didn’t know the exact figure. “If you think about where you can get a show shovel versus where you can get a cup of coffee, a 7 percent lift in hot drinks is going to matter a lot more.”
Other winter weather winners include Walmart (WMT) and others that have strong e-commerce businesses because consumers want to shop from their warm homes, according to Chen.
However, the news isn’t good for all business. Restaurants will face a decline in traffic, and consumers might have less to spend overall if their budgets get eaten up by higher heating bills.
And looking forward to spring, Weather Trends International expects April to be the coldest in 20 years and for summer weather to not be as warm as last year, which will make it harder for retailers to move seasonal merchandise.
So for sellers of winter goods, it’s time to make hay while the snow flies.