Last Winter's Record Temperatures and Earnings Impact

2024 was the warmest winter on record in the contiguous United States. Below is the temperature anomaly the average American experienced from November 1st to March 15th.

Besides a cold snap in January, temperatures were consistently above normal, especially in early spring. Below is the temperature anomaly by marketing area from Feb1st to March 15th. Almost 16°F warmer than normal across the upper Midwest!

This had wide-ranging ramifications across industries in North America. A few companies, such as Lands’ End, were able to adapt and capitalize on the warmer weather by leaning into their “wear now” apparel lines, which resonated well with customers. Similarly, Ferrellgas mitigated the negative impacts on their heating segment by diversifying their product offerings, including the successful Blue Rhino line, which saw increased demand due to the early grilling season. These strategic adaptations allowed them to soften the blow of the unseasonably warm winter. Below is a detailed overview of some of the winners and underperformers affected by this record-breaking winter.

Winners

Core & Main, Inc. (CNM)

• Positive Start to the Season: The performance in the first quarter was positively affected by an earlier start to the selling season in some northern geographies, thanks to the favorable weather conditions. The softer winter in the Upper Midwest facilitated early commencement of projects.
• Challenges in May: Despite the positive start, May brought a lot of wet weather, which hindered construction activities involving digging and installing infrastructure. However, the early start outweighed these challenges.

Lands’ End, Inc. (LE)

• Transitional Weather Solutions: The milder winter and early spring allowed Lands’ End to seize market opportunities with their “wear now” apparel, resulting in great customer responses and driving success.
• Outerwear Performance: Their weatherproof assortment, including lightweight jackets, raincoats, and fleeces, performed well. The “Wanderweight” line of ultra-light packable outerwear and other items contributed to their positioning as a lifestyle brand with attractive family products.

The Toro Company (TTC)

The Toro Company benefited from better weather conditions compared to the previous year. The residential segment saw exceptional growth in their mass channel, driven by the improved weather, which spurred increased consumer activity and purchases in the residential market.

Union Pacific Corporation (UNP)

Union Pacific typically sees its worst margins in the first quarter due to winter weather and low volumes. However, this year’s mild first quarter helped provide an improvement in year-over-year margin metrics.

Ferrellgas Partners, L.P. (FGPR)

• Positive Impact on Blue Rhino: The warmer weather led to a surge in consumer demand for Blue Rhino products, prompting an early start to the grilling season. Blue Rhino’s EBITDA increased by 19% during the third fiscal quarter compared to the previous year, and tank exchange volumes increased in areas affected by electric grid failures due to the heat. Despite the positive impact on Blue Rhino, you'll see headwinds in some of their other product categories below.

Underperformers

SpartanNash (SPTN)

SpartanNash, a grocery retailer with stores concentrated in the Upper Midwest, experienced a notably dry and warm winter. This region, typically accustomed to heavy snowfall, saw significantly less snow, which traditionally drives retail revenue for SpartanNash. The lack of snow created a roughly one percentage point drag on comparative store sales for the quarter, contributing to a challenging retail environment for the company.

Hormel Foods Corporation (HRL)

The warmer winter had a direct impact on Hormel Foods Corporation, particularly affecting canned goods sales. The milder temperatures reduced the demand for canned foods, which are often stocked up during colder months. This shift in consumer behavior posed challenges for Hormel, impacting their overall sales performance for the season.

Vail Resorts, Inc. (MTN)

• Vail Resorts experienced “unfavorable conditions” across North American resorts for much of the 2023-2024 ski season. Conditions improved notably in March and April, positively impacting visitation, particularly at Western North American resorts.
• Despite improved conditions later in the season, Whistler Blackcomb faced significant declines in lift ticket visitation. Overall snowfall at Western North American resorts was roughly 28% lower than the previous season.
• Eastern U.S. resorts experienced limited natural snow and variable temperatures, leading to a 7.7% decline in total skier visits for the 2023-2024 North American and European ski season. Additionally, the Australian ski season in 2023 had poor conditions, impacting Epic Australia Pass sales for the upcoming season.

BRP Inc. (DOOO)

• Snowmobile Sales and Winter Conditions: The snowmobile season ended with softer sales attributed to “unfavorable winter conditions.” This resulted in a high level of snowmobile inventory, significantly affecting seasonal product revenues.

Ferrellgas Partners, L.P. (FGPR)

• Extended and Unseasonably Warm Heating Season: Warmer-than-usual temperatures negatively impacted the heating segments of their business, particularly in the dense central geographic areas, which saw about 10% warmer temperatures.
• Warm Weather Affecting Heating-Degree Days: Heating-degree days during the third fiscal quarter were 15.7% warmer than normal and 9.8% warmer than the previous year’s quarter. Record high temperatures in much of the U.S. contributed to an 11% decrease in gallons sold.

VersaBank (VBNK)

In Canada, particularly Ontario, the milder winter reduced the number of winter-related purchases. This weather dampened activity in winter-related sectors such as HVAC and home improvement, contributing to a lower-than-typical increase in point-of-sale receivable purchases for the quarter.

What impacts did your business see? Reach out for a free targeted look at your weather history and forecast.