It has been a tumultuous few years for the nation’s department stores, but a solid holiday season has provided at least a temporary reprieve for some as shoppers stocked up on home goods, clothing and beauty products.
But now, major retailers are facing a new hurdle: The weather. On Thursday, the same day that Macy’s and J.C. Penney reported better-than-expected holiday sales growth, much of the East Coast was blanketed in snow and ice, leading to hundreds of school closures and workplace delays. Consumers who might have otherwise shopped at the local mall were hunkered down indoors, keeping tabs on their children, shoveling their driveways or preparing for power outages.
And although some types of retailers — hardware stores, say, or grocery chains — may see a rush of customers before and after major storms, analysts said department stores, which rely heavily on foot traffic, are a different story. (Online retailers aren’t immune either: A series of snow storms in early 2015, for example, led to a $35 million decline in e-commerce sales, according to data from Adobe Digital Index.)
“Department stores definitely take a hit when the weather turns bad,” said Anya Cohen, a retail analyst at research firm IBIS World. “Bricks-and-mortar stores are already struggling to get shoppers into their doors, and inclement weather is one more reason to keep them at home.”
The wave of bad weather comes after a particularly strong holiday season for some major retailers. Sales at J.C. Penney stores open at least one year rose 3.4 percent in November and December compared to a year earlier. Macy’s, meanwhile, reported 1.1 percent growth in same-store sales during that period led by increased demand for active apparel, shoes, dresses and coats.
“Consumers were ready to spend this season,” Jeff Gennette, Macy’s chief executive, said in a statement. “We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms.”
Overall, holiday spending is projected to rise about 4 percent to a record $682 billion, according to the National Retail Federation, which will report final numbers late next week. Early projections show that sales rose 4.9 percent during the holidays, accounting for the largest annual increase since 2011, according to Mastercard’s SpendingPulse report.
But analysts cautioned that it could still be a rocky road for retailers like Macy’s, which said on Thursday that it plans to close 11 U.S. stores in coming weeks. The company has already closed 124 stores since 2015, joining a number of other retailers that are paring down as more customers shop online. For 2017, Macy’s says it projects total sales to be 3.6 percent to 3.9 percent lower than they were a year earlier.
“These results are simply not strong enough to suggest that Macy’s has transformed the business nor that future success is guaranteed,” Neil Saunders, managing director of analytics firm GlobalData Retail, wrote in a note to clients. “Growth remains relatively weak.”
The “bomb cyclone” of snow and ice, meanwhile, is adding to retailers’ woes. A brisk holiday season left many stores with lower-than-usual inventory levels, and weather-related transportation delays could add new complications in coming weeks, according to Rachal Snider, a vice president at AFN, a logistics firm that provides transportation services to retailers.
“Not only are people not shopping, but there’s also a whiplash effect when companies can’t get products into their stores,” she said. “It’s a perfect storm of bad conditions for retailers.”