© Darren McCollester/Getty ImagesA snow-swept parking lot with no cars on March 26 in Hyannis, Mass.
In addition to accounting and corporate finance, business schools should teach would-be executives how to pull off a successful snow dance. A little winter weather, it turns out, is a perfect excuse for shoddy results. Unlike revenue and profits, there are no reliable metrics for measuring just how bad a recent winter has been, and executives capable of posting decent results in frigid temperatures can herald the challenge overcome through managerial determination.
With the earnings season coming to a close and summer almost in full swing,
Bloomberg Businessweek decided to see just how much executives at S&P 500 companies played the weather card this winter. The short answer: a lot. In earnings conference calls since Feb. 1, they mentioned "weather" 520 times, up from just 313 in the same period last year. The results were the same with other meteorological catchphrases: "winter" (340 times, vs. 172), "snow" (134 times, vs. 69), and "polar" (44 times, vs. 6).
This, of course, is mostly excusable. It was a pretty terrible winter - particularly in the Northeast - and that had an effect on any business that relied on foot traffic or transportation. As Costco (
COST) Chief Financial Officer Richard Galanti put it: "I'm not trying to make excuses, but it's been unbelievable."
In the first two months of the year, Delta (
DAL) canceled 17,000 flights. In January alone, Urban Outfitters (
URBN) closed individual stores 312 times. And Dean Foods (
DF) said earnings slumped because snow days forced kids to slurp less school milk.
All that cold had people looking for natural ways to stay warm. Church & Dwight (
CHD) said the harsh winter hurt sales of its Nair hair-removal product, and PetSmart (
PETM) said its dog-grooming business was way off.
It wasn't all grumbling. The polar vortex whipped up some winners. Intuit (
INTU) said more people passed up a trip to their local accounting shop in favor of filing TurboTax returns from home. Slippery sidewalks and driveways meant Johnson & Johnson (
JNJ) sold more knee and hip replacements and Snap-on (
SNA) sold more tools for fixing dinged-up cars.
VF Corp.'s (
VFC) North Face jackets were in demand and companies such as Morgan Stanley (
MS) and IntercontinentalExchange (
ICE) cashed in as customers rushed to hedge positions in heating fuels and other petroleum products.
Harsh winter weather helped CBS (
CBS) grow a crop of couch potatoes. "More people are at home turning on their television sets; that's why our ratings are so good," Chief Executive Les Moonves explained.
And then there were the outliers - those executives who refused to cede to weather even if it was chilling their business. A business model should be able to withstand a few snowstorms, they pointed out. Here are a few such instances of tough talk:
- Expedia (
EXPE) CEO Dara Khosrowshahi: "You have bad weather sometimes, and with the global business you tend to be able to work your way through it."
- D.R. Horton (
DHI) CEO Donald Tomnitz: "We have a policy at D.R. Horton, and it's a sincere policy, and that is we don't want our division presidents to give us a weather report."
- St. Jude Medical (
STJ) CEO Daniel Starks: "We have a philosophical bias against blaming the weather for sales in a quarter. ... It probably was a factor, but we aren't able to quantify it and won't rely on it as a reason."
- Keurig Green Mountain (
GMCR) CEO Brian Kelley: "We don't really track it or see it; maybe someday we will, but we don't. ... There's still so many other variables in our business before we talk about weather."
- McDonald's (
MCD) CEO Donald Thompson: "We don't often talk about weather, because next year when it's much better, we probably won't talk about it either. ... We don't plan around weather at McDonald's; we plan around customers."
Thompson (a native of blustery Chicago) makes a good point. The real tally on the polar vortex will be clear a year from now. It's hard to play the weather card two years in a row. In fact, a lot of U.S. executives might just fail to mention this winter entirely.
Reader Comments
to our Newsletter