A frigid winter is just fine for these companies
Owning a soup company can be sweet when the temperature outside plummets. Just ask Gallant Brands President Joseph Hagan. When his company bought Soupman Inc., whose Original Soup Man brand was made famous on "Seinfeld," out of bankruptcy in October, he didn't know its timing would be perfect. But frigid weather sweeping so much of the country has made consumers eager to buy.
"Business is excellent," said Hagan from his company's plant in the Bronx, New York. "We are ramping up [production] to make sure that we get extra batches of soup made. … The last couple of days it was supposed to be quiet here, and it's been very busy."
According to Accuweather Senior Meteorologist Bob Larson, at least 353 record low temperatures have been set over the past seven days. Ski resorts, coffee shops and makers of outerwear are among the companies benefiting from the arctic blast.
"Before it gets better, it's going to get worse," said Larson.
Indeed, snow, sleet, and freezing rain pummeled normally balmy Florida and the Southeast seaboard on Wednesday, delivering a white coating that some cities haven't seen in decades. Cars spun out of control on icy overpasses from Texas to Georgia. The water park at Walt Disney World and other tourist attractions in Florida closed their doors.
Forecasters expect a polar airmass will hammer many Northeastern cities including Washington, D.C., Baltimore, Philadelphia and New York City on Thursday. The Big Apple hasn't had a high temperature above 32 degrees since Christmas, a cold outbreak that could rank among the top five on record. A blizzard warning has been issued for New England ahead of Thursday's expected storm.
But frigid consumers are continuing to shop, especially online. "The big chill in much of the country likely helped heat up the digital marketplace, too," said Michele Dupre, group vice president for retail, hospitality and distribution at Verizon Enterprise Solutions, in a statement. According to Verizon (VZ), e-commerce traffic volume jumped 15 percent on New Year's Eve and 32 percent on New Year's Day compared with a year earlier.
Operators of ski resorts are certainly welcoming the extreme wintry weather.
"New England, the East Coast and the Midwest had a jump-start on the ski season with early snow and optimal snowmaking temperatures," said Kelly Pawlak, the president and CEO of the National Ski Areas Association (NSAA), a trade group. "This led to strong bookings for the Christmas holiday. And despite colder temperatures, turnout has been solid."
Coffee shops such as Starbucks (SBUX), Dunkin' Brands (DNKN) and Restaurant Brands' (QSR) Tim Hortons should do well as will quick-service restaurants such as McDonalds (MCD), which is offering $1 cups of coffee, according Darren Tristano, an adviser to market researcher Technomic.
"Brands that have drive-thrus are going to be in a good place," he said. "The frigid temperatures going to make it harder for restaurants that are more sit-down."
Cold weather also warms the bottom lines of outdoor apparel companies such as VF Corp (VFC), the parent of Thee North Face; Columbia Sportswear (COLM); and Deckers (DKC), whose brands include Wolverine Worldwide, according to Pivotal Research analyst Mitch Kummetz. He follows the sector and rates all of these companies' shares as a "buy."
Heading into the season, retailers were cautious with their orders because the previous two winters were warmer than usual. This winter started off strong when temperatures cooled during the Thanksgiving holiday.
"The fact that we got cold weather before Thanksgiving is a lot more meaningful than the cold weather we're getting now," said Kummetz. "Once Black Friday hits, everything goes on sale. The fact that we're getting cold weather now is good also because it helps these companies clear their excess inventory. Nobody wants to be carrying a lot of outerwear going into February and March."
