Higher Heating Bills Might Keep Shoppers Home After Rough January

After inclement weather in January led to weak mall traffic, retailers have another challenge to face: “the hidden heating ‘tax.’” KeyBanc analysts say the extra $50 to $200 in heating bills may cause consumers to pull back on discretionary purchases this spring.

How much could higher heating costs represent?

After miserable weather in much of the nation led to lower mall traffic last month, retailers have something else to worry about: higher heating bills.

“Higher heating bills could have a lagging impact as consumers begin to receive and pay” them, KeyBanc analyst Ed Yruma wrote in a note Tuesday. The colder weather could add $53 to $200-plus onto the average winter heating bill of $600 to $2,000, he wrote, potentially cutting into discretionary spending this spring.

Sub-zero temperatures and heavy snowfall kept many shoppers at home last month, and Weather Trends International is now calling for the coldest February in 21 years, according to a note from J.P. Morgan analyst Matthew Boss.

Retail companies like Buckle, Bon-Ton, and Ascena Retail might be impacted the most by the higher heating bill effect, given their concentration of stores in the Midwest and the Northeast, and their lower-income consumers, KeyBanc’s Yruma wrote.

Ike Boruchow, an analyst at Sterne Agee, said retailers without significant e-commerce operations will be especially hurt by the tough weather.

Estimated impact of weather on winter energy bills:

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