Earlier this week a brief story flitted across the news wires citing a Brunswick Corporation (boats, boat engines, bowling & fitness equipment and billiards kit) spokesperson attributing weakness in marine demand to the impact of weather conditions. Interestingly, this scribe has yet, in the good length of time he has followed the firm, to hear Brunswick attribute success at their “fun centers” (bowling, billiards and eating) to poor weather driving punters indoors. Good management obviously knows when and where to give credit.
Certain UK retailers, for example, rejoiced in crediting the recent sunny Easter weather: supermarkets (picnic items), garden centers, DIY merchants and spring fashion got a big fillip: retail footfall was up 6% to 10% according to some analysts.
Yet the same sun also, it seems, hurt large ticket items such as flooring and sofas. At least that is what sofa makers like SCS upholstery plc and flooring specialist such as Carpetright plc claimed in trading updates. In the case of the former, Chief Executive David Knight said:
"We have to blame the weather. The retail parks were extremely quiet and if you look at the travel news it seems people spent the holiday travelling to the seaside."There is some history here. SCS also moaned about hot weather in 2002, 2003 and 2004. However, wet Easter/May holiday weather in 2005 was (commendably) mentioned by management as a bonus (although similar meteorological aid in 2006 was not).
Graphing weather data against SCS equity performance (exhibit 1) only appears to show that management, when scratching around for explanations, can sometimes make the data tie in with performance as a commentary point. But the SCS statistical case for the relationship, happily for non fatalists, is weak. In 2002 for example, all the principal April/May shopping holidays saw fair or good weather and SCS’s shares did not suffer. Yet this year they are being crucified (and the May Day forecast, for what it is worth, is for sun).
Exhibit 1: Rainfall over Easter and May Bank holidays vs SCS Upholstery's share price change
The larger question, of course, is whether big ticket retail spending on household items is slowing in the UK (cf Exhibit 2) and that is not clear yet.
Exhibit 2: Household goods retail sales (volume) vs SCS Upholstery's rolling 3 month share price change
SCS is a prudent, very well run outfit with cast-iron financials. But it is unemployment, wage settlements, interest rates and inflation rather than the weather it should be concerned with.
NB: The author holds SCS equity
Sources: UK Met Office; UK National Statistics