Weather Economy

Firms point finger at Sandy for poor results

Dan Bobkoff Nov 14, 2012
HTML EMBED:
COPY
Weather Economy

Firms point finger at Sandy for poor results

Dan Bobkoff Nov 14, 2012
HTML EMBED:
COPY

We’re starting to see how Superstorm Sandy is affecting corporate earnings. Home Depot said the storm added at least $70 million in sales. But Saks Fifth Avenue — which we should say does not have a good selection of generators — closed some stores in the Northeast for days. Since it hit so many, it can be tempting for a company to blame all sorts of things on the weather. 

“You can’t blame anyone else, blame the weather,” says Michelle Leder, who runs Footnoted.com.

After Hurricane Katrina in 2005, all sorts of companies came out to claim it hurt earnings. 

“We saw that Intel mentioned Hurricane Katrina as impacting their business. Regis, the large haircutting chain mentioned it,” she says. 

Leder says Intel, the chipmaker, might have been a stretch.

It’s not easy to tell how much severe weather truly affects businesses. For many companies, storms just defer sales that would have happened anyway. You don’t buy a sweater that week, but you do the week after. In general, weather isn’t that big deal in the scheme of things. 

“If you forgo a week of sales, that’s only 1/52 of your year’s worth of sales, and that’s only one year in the very long history of a company,” says Matthew Coffina of Morningstar. 

However, it can be typical and tempting to blame the weather when there’s another problem with your company. 

“It could be that a competitor took some share away. It could be that you don’t have the styles that people wanted,” says Stephen Biggar, director of equity research at S&P Capital IQ. 

Even so, Biggar acknowledges Sandy was a big deal. This was not just a run-of-the-mill storm. 

But as more companies file earnings in the coming weeks, keep your eyes peeled. Some filings will raise eyebrows.

Michelle Leder says, “There was a small company in China I was looking at that said they couldn’t file their filings in time because of the storm.” 

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.