Tags: US | Winter | Weather | Business | Impact

Winter Storms Create Business Winners, Losers

Wednesday, 10 Feb 2010 05:44 PM

 

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Back-to-back snowstorms on the East Coast have brought a blizzard of sales of shovels, groceries and booze. For airlines and department stores, the region's wintry weather has resulted in millions of dollars of lost revenue.

As businesses tallied up the impact of the second major snowstorm in less than a week, forecasters warned of a third wave of snow that could hit the Northeast Monday.

On Wednesday, people planning to travel or shop were stopped in their tracks. From Washington to New York City, roads, airports and businesses were closed.

Airlines have canceled hundreds of flights in the past week and stand to lose millions of dollars, while retailers concentrated in the East — such as BJ's Wholesale and Dick's Sporting Goods — are likely take a noticeable hit to first-quarter revenue, analysts say.

Not all businesses cursed the bad weather, however. Ski resorts, liquor shops and hardware stores counted themselves lucky as out-of-school kids hit the slopes, and the grown-ups bought shovels — and booze — as the snow piled up.

Up to 16 inches fell in parts of western Maryland and Reagan National Airport in Washington had more than 9 inches by midday, making it the snowiest winter on record in D.C. That was on top of totals up to 3 feet in some places from the weekend storm.

Airlines have canceled thousands of flights in the past week. Continental had scrubbed at least 900 flights on Wednesday, while United and Southwest canceled 600 apiece and American 300 by early afternoon.

The major airlines said it was too early to put a dollar figure on the storms' impact, but one analyst said February's foul weather would cost them millions of dollars.

Yet despite the large numbers of flights that have been disrupted, the timing of the storm was fortunate. Airlines typically reduce the number of available flights anyway in February, a shoulder month between winter and spring holidays.

Robert Herbst, an aviation consultant, said many customers will ask for credits toward future travel instead of refunds, which should also work in the airlines' favor.

For shopping malls and department stores, the loss of revenue may be permanent.

Dan Hess, CEO of research firm Merchant Forecast, said a snowstorm of this magnitude can knock down sales by 10 to 25 percent for the week. When it happens in the slow months of January and February, "You don't make that business back up," Hess said.

Weather research firm Planalytics said Bon-Ton Stores Inc., Dick's Sporting Goods and BJ's Wholesale Club all have three-fourths or more of their stores in the path of the two storms.

But the snow isn't bad news for all retailers. For example, sales at airport stores soar when flights are delayed — as long as the entire airport doesn't shut down, as happened at Washington's Dulles and Reagan National airports.

Also happy about the snow was Mitch Aaronson, co-owner of Cairo Wine & Liquor in Washington. Aaronson said sales tripled last Saturday just before the first storm dumped two feet of snow on the capital. With the federal government shut down, the cash register has been ringing steadily ever since.

"People are even asking us for things we don't sell, like milk," Aaronson said.

At Frager's Hardware in Washington's Capitol Hill neighborhood, owner John Weintraub said he sold out of Duraflame logs and can't restock because his supplier ran out too. At a nearby Ace Hardware, co-owner Gina Schaefer said people bought all the snow shovels she had, then they bought garden shovels.

In Philadelphia, James Crouthamel, a manager at Fairmount Ace Hardware, said sales of rock salt and snow shovels were booming. But he didn't think he would run out, "as long as the (delivery) truck gets here."

The school and government closures are a boon to ski resorts within driving distance of big cities. The abundant snowfall reduces costly electricity used for man-made snow, said Don MacAskill, general manager of Pennsylvania's Whitetail ski area, located about 90 minutes from Washington.

The storms have brought extra work for plumbers and other handymen.

"The day of (the storm) is kind of interesting, with lots of emergency calls," said Sal Mangia at Citywide Sewer & Drain on New York's Long Island. "But after it melts, that's what gives us more work — flooded basements, clogged drains and cesspools backing up."

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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