It’s clear the entire retail industry ran out of steam in January as customers struggled to pay holiday bills. While that’s not an unusual phenomenon, it certainly shows that weather wasn’t the only culprit.
But the cold did help a specific breed of online retailers in January — those specializing in cold-weather gear. Internet Retailer suggests consumers upped their online purchases of parkas, gloves, hats, etc., because it was too cold to go out to the stores for those items.
Summit Sports, a Michigan-based retailer of sporting goods, had this to say about the cold: “Our apparel sales are through the roof on Amazon … We’ve seen a 50% to 60% increase in sales on Amazon.” According to Compete Inc., the average weekly traffic in January for seven big-time retailers of cold-weather gear increased by 22% year-over-year. Both Columbia Sportswear (COLM) and Timberland, part of VF Corp. (VFC), saw YOY increases of more than 40%.
On this statistic alone, not to mention previous articles I’ve written about COLM stock, I’d say that the Portland-based apparel maker, although not exclusively an online retailer, is as good a stock to own if you want to benefit from the polar vortex.
High-End Online Retail
So far, I’ve given a wait-and-see rating to ZU stock and a thumbs-up to COLM stock. Another omni-channel retailer that could benefit from the brutal winter we’ve been having is Williams-Sonoma (WSM). WSM stock generates about half its annual revenue from online sales, and, to a much lesser extent, catalog sales.
Although WSM stock is down almost 5% year-to-date through February 26, it has two big factors working in its favor as we move further into 2014. First, because it already generates so much of its business online, any winter storms had a smaller chance of affecting its overall business. Secondly, as the housing industry continues to recover and grow, consumers are going to want new gadgets for the kitchen.
WSM stock might be drifting downward with the rest of specialty retail at the moment, but once we get into spring and earnings are released in mid-March, I think we’ll see that WSM didn’t skip a beat in January. I like WSM stock a lot.
Spotting the winners in online-only retail is a very tricky deal because there really aren’t many publicly traded options. Beyond Amazon and eBay (EBAY), you might have a handful of names worth considering, including ZU stock. Add in the fact retailers aren’t nearly as forthcoming about their monthly sales numbers as they used to be and you have a very imprecise exercise.
In addition to the three I’ve mentioned already, you might want to consider companies like Walmart (WMT) who have huge numbers of in-store customers but also operate very large e-commerce businesses. As the snow fell in January and its customers couldn’t make the trek to the store, it’s possible many of them went online.
If you must go online-only, your truest bet is ZU stock … but be prepared for a lot of volatility. Otherwise, I’d go with COLM stock or WSM stock. And if you don’t mind paying top-dollar, Amazon’s always a good play for online retail.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.