Storm to Spawn Mixed Results for Retailers, Restaurants
02/08/2013| 04:25pm US/Eastern
--Retailers like Sears, Home Depot stand to benefit as consumers stock up for storm
--Restaurants, clothing stores likely to see negative impact
--Analyst says travel disruptions could prolong effects
(Adds comments from Lowes and updates throughout.)
By Karen Talley and Annie Gasparro
Restaurants and retailers are bracing for the blizzard approaching the Northeast, as its impact will be either boom or bust on their sales.
Some stores, like Sears Holdings Corp. (>> Sears Holdings Corporation) and Home Depot Inc. (>> The Home Depot, Inc.), are capitalizing on the demand for snowblowers, shovels and other winter gear. But clothing stores and restaurants that rely on weekend traffic are facing a more troubling forecast.
Sears, which has hundreds of stores from Philadelphia to Maine that are in the storm's path, said it already has an abundance of winter-weather merchandise in stock as it has been a relatively mild season so far.
Home Depot said it is preparing for the snow storm similar to the way it did for superstorm Sandy last fall, though on a smaller scale. And Lowe's Cos. (>> Lowe's Companies, Inc.) said its regional distribution center in Connecticut is working to help the stores reopen as soon as possible Saturday, even if they have to close early ahead of the storm.
Home-improvement chains typically get a noticeable boost from blizzards, though not as strong or long-lasting as sales from hurricane damage.
Brian Patry, assistant store manager at a Sears store in South Portland, Me., said Friday that his store started seeing "strong" demand for storm merchandise Thursday afternoon, and that has continued.
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 affected, and had snow removal vendors on standby to clear roofs and parking lots.
"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.
Target Corp. (>> Target Corporation) said it has been preparing its stores for the storm over the past week, and "taking the necessary steps" to ensure that if any of them lose power, "perishable items are replenished quickly" after the storm. Stores that sell groceries tend to see an uptick in sales of canned foods, but if their stores lose power, that is offset by all the products that go bad.
When a storm looms, restaurants and clothing shops typically take a hit within one to two days of the big event. Saks Inc. (>> Saks Inc), for instance, said it is already planning to close several stores earlier than normal on Friday.
"But sales tend to be made up in the days following the storm because of pent-up demand" from consumers with cabin fever, said Miller Tabak analyst Stephen Anderson. Gasoline shortages or widespread travel disruptions, however, can hold off that trend, as seen after superstorm Sandy. "We caution it may take longer for normal sales trends to resume," 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' said its headquarters were closed Friday, and that while individual store closures are determined by the franchise operators, it is in close contact with them to monitor the situation.
Restaurants with waiter service, like Cheesecake Factory (>> The Cheesecake Factory Incorporated), are also likely to take a hit, as they usually attract a weekend rush. If roads and power aren't restored by early next week, the storm could dampen their Valentine's Day business on Thursday.
But delivery chains, like Domino's (>> Domino's Pizza, Inc.), profit more when people are avoiding the roads. While Valentine's Day is always a big day for pizza sales--as surprising as that may be--lingering snow on the road could help them see even an even bigger pop.
Cafes and sandwich shops, like Panera Bread Co. (>> Panera Bread Co), which has about 15% of its stores in the storm's expected path, will likely suffer if commuters aren't back to their normal work schedule by Monday.
"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 Panera's co-Chief Executive Bill Moreton on a conference call Wednesday. "Who knows what affect that'll have.... We'll have to see together."
Write to Karen Talley at email@example.com and Annie Gasparro at firstname.lastname@example.org
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Stocks mentioned in the article : Sears Holdings Corporation
, Target Corporation
, Wal-Mart Stores, Inc.
, Saks Inc
, The Cheesecake Factory Incorporated
, Dunkin Brands Group Inc
, Domino's Pizza, Inc.
, The Home Depot, Inc.
, Lowe's Companies, Inc.
, Panera Bread Co