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The Key Takeaways
- Retailers' fall apparel sales forecasts were challenged by unseasonably warm weather and hurricanes.
- Shoe Carnival reported that while sandals sold well, fewer people purchased boots in October.
- Old Navy says parents are holding off on buying jackets, and other items from the retailer.
Mother Nature is unpredictable and has little regard for corporate profits.
And she's been busy lately. Retail executives said that hurricanes and unseasonably hot weather, which forced stores to close, had wiped out apparel and shoe sales estimates. They made this statement in the last few weeks, when they released their latest quarterly results.
As more retailers report their quarterly earnings, the focus will be on how the mild autumn shifted buying patterns. Dick’s Sporting Goods, Burlington Stores, and Lands’ End are all scheduled to release their third-quarter earnings on Tuesday.
Here are some of the weather effects we've seen so far.
Shoppers put off purchases—especially for growing kids.
Katrina O’Connell, Gap’s CFO, said that hurricanes and warm temperatures lowered sales growth by about one percentage point in the last quarter.
Executives said that the shift affected Gap’s entire product portfolio, including Gap, Old Navy Banana Republic, and Athleta. But the drop-off was particularly pronounced in the baby and kids' sections at Old Navy.
The brand attracts people looking for bargains, who are more likely to purchase items as the need arises—as are parents, CEO Richard Dickson told analysts.
“You’re not buying a puffer [jacket] in weather that you don’t need it,” A transcript from AlphaSense shows that Dickson made the statement during a conference. “Six months later, your kid could have a different size.”
Fewer people buy boots when more people are buying sandals.
Mark Worden, the CEO of Shoe Carnival, noted that although sandals sold well into October, they weren’t able to offset poor boot sales.
Patrick Edwards, CFO of Shoe Carnival, said that comparable store sales were down by a high single digit percentage in September and October. Edwards said that about half of the decline can be attributed in part to a drop in boot sales.
Boots’ performance — coupled with hurricanes — put Shoe Carnival about $10 million behind its sales goal for the latter part of the quarter, Worden said, according to a transcript from AlphaSense.
He believes that boots will be a thing of the past. “Winter is coming,” Worden said on his company's conference call. “We do anticipate growth.”
When temperatures drop, apparel sales rise.
Richard Gomez, executive vice president of Target (TGT), stated that clothing sales declined less than 1 percent throughout the quarter. Gomez noted that clothing sales spiked as cold fronts moved through.
“When we saw the weather break in select markets, we saw a 600 basis point improvement,” Gomez said on his company's conference call, using industry lingo to describe a 6% improvement. “That really bodes well for our apparel assortment as the weather gets colder consistently.”
Columbia Sportswear executives (COLM), who lowered their sales forecast for the year in October, cited a waiting period for cooler weather. Barbara Rentler is the CEO of Ross Stores’ parent company and said that cooler temperatures brought back customers to Ross Dress for Less & dd Discounts.
"As the weather changed by region, we watched the consumer come back," Rentler said on a conference call last week.
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