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Wet Weather Dampens Sales

For many companies, particularly in the Northeast, the unseasonable start to summer put a damper on sales. In a conference call with investors late last month discussing results for its fiscal first quarter, which ended June 20, Spartan Stores Chief Executive Officer Dennis Eidson counted the chilly weather in northern Michigan among the challenges the company has faced this summer. The unseasonably

For many companies, particularly in the Northeast, the unseasonable start to summer put a damper on sales.

In a conference call with investors late last month discussing results for its fiscal first quarter, which ended June 20, Spartan Stores Chief Executive Officer Dennis Eidson counted the chilly weather in northern Michigan among the challenges the company has faced this summer.

“The unseasonably cool summer weather has had an effect on the northern Michigan tourism industry,” he said. That, along with high unemployment in the state, price deflation and competitive store openings, had a negative impact on the company's retail and wholesale sales in the first quarter.

Cool, rainy weather in the Northeast might also have been a factor in soft sales at Montvale, N.J.-based A&P, according to at least one analyst.

“The weather has not been good, and their shore stores probably did not do well, I expect,” said Karen Short, an analyst at Friedman, Billings, Ramsey & Co., New York. “Plus, I think maybe people didn't barbecue.”

Natick, Mass.-based BJ's Wholesale Club reported in July that its comparable-store sales for the month of June were down by about 1% to 2% because of the cool, rainy weather in the Northeast.

In a conference call last week discussing second-quarter results, Frank Forward, BJ's chief financial officer, cited the unseasonably cool and rainy weather as one of the factors depressing comps for the whole second quarter, but noted that warmer weather in the first two weeks of August was reversing that trend.

“We've had some incredibly tough weather in most of our geography,” said BJ's CEO Laura Sen in response to a question from an analyst.

Seasonal general merchandise sales in particular were impacted in the second quarter, the company said.

Ironically, the warming trend in August might hurt those retailers who are hoping to get an early start on fall sales, according to a report by Citigroup analyst Deborah Weinswig.

“Weather is expected to be somewhat unfavorable for back-to-school same-store sales due to warmer and drier conditions year-over-year, according to Weather Trends International,” she wrote in the report. “Typically, back-to-school sales benefit from cool and wet weather in August and September as these conditions drive traffic and stimulate sales of fall merchandise. Favorable weather conditions are not expected to arrive until weeks four and five of September, which could prolong the back-to-school season.”

Other findings from the Citigroup report:

  • Price deflation should give retailers more flexibility to expand gross margins or lower prices.

  • Lower fuel prices should increase spending power for consumers.