One key retail impact of changing weather patterns is simply that bikinis won't sell when there's snow on the ground, regardless of what the calendar and shelf inventory say. Target (NYSE:TGT) surprised Wall Street on Tuesday (April 16) by reporting that it won't be able to realize the quarterly revenue it had promised to deliver. The reason? "Oh, the weather outside is frightful…"
The more corporately phrased reason? "The company now expects its first quarter 2013 comparable-store sales growth will be approximately flat, due to softer-than-expected sales trends particularly in seasonal and weather-sensitive categories across the store."
Wall Street takes these mercury movements very seriously. Deborah Weinswig, chief retail analyst at Citi Research (and arguably the top retail analyst in the country), put out a note Wednesday (April 17) morning noting the exact--down to a tenth of a degree--temperature averages that Target faced.
"While Feb. weather conditions likely benefited Winter merchandise with avg. temps in TGT's geographies down (-3.2)°F YOY, according to Weather Trends International, we believe March conditions were very unfavorable for Spring merchandise sales, with avg. temps down (-8.2)°F. We expect Apr. conditions to be neutral for sales with similar temps forecasted YOY."
In another "can't do much do about" category, Target was also fighting economic fears among its core lower-income shoppers, according to The Wall Street Journal, shoppers who "remain extremely cautious with spending."
The weather's impacts on physical stores are many, but it seems that e-tail operations have a lot more temperature resistance, with online sales in the U.K. increasing some 15 percent. "Despite a disappointing start to spring, with parts of the country experiencing the highest March snowfall in 30 years, the online clothing sector recorded growth of 15 percent year-on-year—in contrast with the performance reported by several major UK high street brands." It's not really a conflict as shoppers will often use online purchases to gather items that they expect wanting months down the line.
"What this demonstrates is that e-commerce is fairly unique in the retail industry, as it doesn't always reflect analysts' expectations," said Andrew McClelland, Chief Operations & Policy Officer at IMRG. "Online shopping is so engrained in the culture now, the market seems to keep up its double-digit growth irrespective of potentially disruptive external factors."
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