Storm to Spawn Mixed Results for Retailers, Restaurants

02/08/2013| 12:51pm US/Eastern

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--Retailers like Sears, Wal-Mart stand to benefit from storm

--Generators, cold weather wear big movers

--Different impacts for restaurants

(Adds comments from Target, Home Depot and additional comments from Wal-Mart.)

 
   By Karen Talley and Annie Gasparro 
 

It's going to be boom or bust for retailers and restaurants as the blizzard approaches the Northeast.

Sears Holdings Corp. (>> Sears Holdings Corporation) has hundreds of stores from Philadelphia to Maine that are in the storm's path, and they are all still open as the retailer capitalizes on demand for snowblowers, shovels, portable generators and other blizzard-weather merchandise.

There is an abundance of these products because the winter has largely lacked snow so far, spokesman Larry Costello said.

Stores were set to stay open as long as possible to meet continued demand. "We are currently monitoring the storm and will make a decision about our stores' hours of operation," Mr. Costello said.

Brian Patry, assistant store manager at a Sears store in South Portland, Me., said mid-morning Friday that his store was planning to stay open for the duration. Storm merchandise started moving Thursday afternoon and "strong" demand has continued, Mr. Patry said. Consumers are mostly buying snowblowers, generators, and vacuums that suck up water after high tides. Flashlights and batteries were also popular, as was cold weather gear, Mr. Patry said.

Customers are "upbeat and energetic, taking it as it comes and looking for sunshine on Sunday," Mr. Patry said.

Wal-Mart Stores Inc. (>> Wal-Mart Stores, Inc.) was in full storm preparation mode for its roughly 130 locations in the storm's projected path. The retailer, known for its sophisticated emergency and storm response measures, was preparing by placing generators in areas expected to be effected. The retailer also had snow removal vendors on standby to clear roofs and parking lots, and its emergency merchandise team was making sure stores were well stocked with items like snowblowers, ice scrapers and ready-to-eat foods. Trucks were set to be back on the road to replenish stores as soon as the storm passes.

"You can definitely see spikes in certain products like heaters, shovels, synthetic logs, and winter clothing, including boots," said Wal-Mart regional manager Dave Cardello.

As for store closures, "We have to balance operating as long as we can to serve customers with the safety of our" employees," Mr. Cardello said.

"Over the past week, we have prepared our stores that are in the path of the storm by supplying essentials such as batteries, flashlights, bottled water and dry food," Target Corp. (>> Target Corporation) spokeswoman Stacia Nelson said. "In addition, we are taking the necessary steps to ensure that after the storm, in the event of power loss, perishable items are replenished quickly."

The storm has not yet caused any closings of Target stores.

Stephen Holmes, a spokesman for home improvement retailer Home Depot Inc. (>> The Home Depot, Inc.), said the chain operates with a nor'easter as it does with a hurricane--just not to the same scale.

"Trucks are rolling in today, and we've been restocking things like shovels and snow blowers, but the stores are pretty well fortified with winter products already," Mr. Holmes said.

While the sales boost isn't as big or as long-lasting as a hurricane for home improvement chains, it does have a positive impact. Fellow home improvement retailer Lowe's Cos. (>> Lowe's Companies, Inc.) can also be expected to do booming business.

However, for smaller retailers that don't offer blizzard wares, it's going to be a tough weekend. At Saks Inc. (>> Saks Inc), for instance, there are already plans to close several stores early, a spokeswoman said. The Gap Inc. (>> The Gap Inc.) location on Sixth Avenue in New York City was sending employees home early from the virtually empty store.

For restaurants, weather is always an issue this time of year. When a storm looms, their sales typically take a hit within one to two days, but "sales tend to be made up in the days following the storm because of pent-up demand," said Miller Tabak analyst Stephen Anderson.

Cabin fever didn't strike after superstorm Standy, however, because of gasoline shortages in the area. "We caution it may take longer for normal sales trends to resume because of the potential for widespread disruptions," Mr. Anderson said.

Dunkin' Brands Group Inc. (>> Dunkin Brands Group Inc), which is based near Boston, is "by far" the most likely chain to be hurt by the storm, according to Mr. Anderson, as more than half of its donut and ice cream shops are in the Northeast. Dunkin's headquarters were closed Friday, but the closure of its stores is ultimately up to the franchise operators. A Dunkin' spokeswoman said the corporate office has "been in contact with our field teams and franchisees in preparation for the threat of the storm" and will closely monitor the situation, making safety its top priority.

Restaurants with waiter service, such as Cheesecake Factory (>> The Cheesecake Factory Incorporated) and Darden Restaurants Inc. (>> Darden Restaurants, Inc.), the owner of the Olive Garden and Red Lobster chains, will be hurt over the next couple of days as they are typically reliant on weekend business, Mr. Anderson said. If roads and power aren't restored by early next week, the storm could also dampen their Valentine's Day days.

Panera Bread Co. (>> Panera Bread Co) and Chipotle Mexican Grill Inc. (>> Chipotle Mexican Grill, Inc.), which have about 10% to 15% of their stores in the storm's expected path, could get off easy in that most of their business comes during the week. But if commuters aren't back to their normal working schedule by Monday, these chains will be impacted, too.

"We're not looking forward to this storm coming up the East Coast over the weekend, but that's the nature of [sales] in the first quarter," said Bill Moreton, Panera's co-chief executive.

"Who knows what affect that'll have," he said on a conference call Wednesday. "We'll see together." Superstorm Sandy caused Panera's customer traffic to decline last quarter, when it would have otherwise been relatively flat.

Delivery chains, like Domino's (>> Domino's Pizza, Inc.) and Yum Brands Inc.'s (>> Yum! Brands, Inc.) Pizza Hut, profit off more people avoiding the roads. Valentine's Day is always a big day for pizza, surprising as it may be, and lingering snow could boost sales even more than normal.

-Write to Karen Talley at karen.talley@dowjones.com

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