Retailers scramble as Super El Niño disrupts seasonal sales plans
Retailers scramble to adjust seasonal strategies as the strongest El Niño on record disrupts supply chains and consumer demand in North America.
The strongest El Niño on record is forcing retailers to overhaul their seasonal strategies, from winter apparel to supply chain operations. This climate phenomenon, defined by unusually high Pacific Ocean temperatures, throws off seasonal expectations, making it difficult for brands to match inventory with actual consumer needs.
El Niño’s impact will be most severe in North America during the fall and winter months. According to meteorologist Matthew Porcelli, a senior solutions engineer at The Weather Company, this year’s event breaks from past trends. “This is going to be a year that we’ve never experienced before, and anytime you’re in business, the goal is to reduce the amount of uncertainty to reduce the risk in your sales plans, and so we’re absolutely seeing that more than ever this year,” he said by video conference.
Industry analysts have already identified specific brands facing higher risks. Laurent Vasilescu, a senior analyst at BNP Paribas Equity Research, raised concerns about Kontoor’s Hellly Hansen ski brand in August, citing the likelihood of a “very warm winter” due to the Super El Niño conditions. Wells Fargo analysts, led by Ike Boruchow, pointed to Burlington, Deckers, Canada Goose, and VF Corp.’s The North Face and Timberland as particularly vulnerable. Burlington, which depends heavily on winter coats, encountered similar difficulties during the last major El Niño event a decade ago. Deckers may need to reduce prices on Ugg footwear if December remains unusually mild, while Canada Goose’s focus on warm clothing could face challenges if consumers shift spending priorities.
Retailers brace for El Niño’s sales squeeze
VF Corp.’s brands carry additional risks, Boruchow noted. Both The North Face and Timberland experienced weaker sales and profit margins during previous El Niño winters, particularly in 2015 and 2023. “Consumers don’t buy coats when it is warm outside,” he said. The mismatch between pre-ordered inventory and changing weather creates a dilemma: retailers must either accept unsold stock or clear it through aggressive discounts to make room for spring merchandise.
Porcelli clarified that while El Niño’s effects remain unpredictable in specifics, their general patterns are well understood. Retailers frequently cite weather as a factor in earnings reports, but this year’s conditions require a different approach. Demand for hiking and camping equipment may extend beyond typical seasons, while holiday shoppers could prioritize outdoor activities over traditional winter apparel. Over a quarter of those surveyed by The Weather Company said that good weather leads them to spend more, and the warm temperatures caused by El Niño will seem like good weather to many people.
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Energy costs and storm risks complicate forecasts
However, the outlook isn’t entirely positive. While milder temperatures could reduce energy expenses—utility rates have climbed nearly 40% over six years—heavier rainfall and storms, especially in southern regions, may trigger repair costs. Bank of America analysts warned that long-term climate pressures could still drive up utility bills, despite potential short-term relief. For retailers, the challenge extends beyond weather itself to its secondary effects: power outages could create unexpected demand for backup generators, presenting new sales opportunities.
Porcelli’s guidance for retailers is straightforward: delay liquidating winter inventory as long as possible. With December expected to be one of the warmest on record, the coming months will determine whether retailers can handle risk and opportunity—or end up with excess warehouse stock.
Consumer spending shifts with warmer weather trends
El Niño’s influence stretches beyond clothing and energy costs, altering consumer behavior in subtle but meaningful ways. The Weather Company’s survey found that nearly 28% of respondents spent more during mild winters, often reallocating funds from heating bills to travel, dining, or outdoor purchases. This aligns with historical trends: during past El Niño winters, retailers saw higher demand for patio furniture, grilling equipment, and holiday decorations marketed for outdoor use. The gap between traditional seasonal expectations and actual weather forces brands to rethink marketing, such as positioning “winter-ready” products as year-round essentials.
Supply chain complications further strain retail planning. While El Niño reduces the need for cold-weather inventory, it heightens risks in flood-prone regions. Southern areas, in particular, face increased chances of heavy rainfall, which could delay shipments or damage distribution centers. Porcelli noted that retailers with warehouses in vulnerable zones, such as parts of Texas or the Southeast, must prepare backup plans to reroute stock. The difficulty is compounded because many brands lock in supplier contracts months in advance, leaving little flexibility for last-minute adjustments. Even companies with adaptable logistics, like VF Corp., must balance the cost of holding excess inventory against potential losses from unsold winter goods.
New opportunities may emerge in specialized markets. The extended hiking and camping season expected this winter could benefit brands targeting outdoor enthusiasts. Porcelli observed that early snowfall in the Rockies or Pacific Northwest, unlikely under this El Niño, could create localized demand spikes, requiring regional inventory shifts. Meanwhile, holiday shoppers may favor gifts suited to warmer weather, including electric fans, portable coolers, or outdoor-themed Christmas decorations.
