The intensely cold temperatures generated by the “beast from the east” were blamed for the poor performance of a number of major UK companies in sectors ranging from retail to car insurance
Shares in Greggs – the UK’s largest bakery chain – took a nose dive of 15% on Wednesday following a drastic decrease in footfall and sales in March this year.
The downturn coincided with one of the coldest periods of British weather in recent memory – known as the “beast from the east” as it was caused by unusually prevalent arctic winds stretching from far east Russia, over parts of Asia and Europe, all the way up to the British Isles.
Sales growth for Greggs was 2.2% slower for the first 18 weeks of 2018 compared with the same period last year as the company was forced to temporarily close several stores across the country.
But the Newcastle-based company wasn’t the only one to suffer. Many other businesses have blamed the extreme cold snap for their misfortune in 2018.
Ocado drivers stopped in their tracks
During late February and early March, the beast from the east got into full swing and the UK was blanketed in thick snow, causing poor driving conditions.
For online grocer Ocado, this spelled doom as tens of thousands of orders were prevented from reaching their destinations, leading to a £1.5m drop-off in profit, equivalent to 1% of their sales.
Ocado finance director Duncan Tatton-Brown said: “I’ve never seen weather like this in the time I’ve been at Ocado.”
Despite the conditions, the company still managed to deliver to 296,000 customers in the snow and any food that wasn’t delivered was given to food banks.
Weather claims cripple Direct Line
The UK’s leading direct car insurer had £55m set aside for weather claims for the entirety of 2018 but with summer around the corner, £50m of that sum is already spoken for.
The heavy snow caused by the beast from the east didn’t just derail delivery drivers, it also caused far more road accidents than usual.
Direct Line CEO Paul Geddes said: “The freezing weather earlier this year hit many drivers, households and businesses hard.
“We estimate the claims associated with the major freeze event will utilise the group’s full annual weather budget.”
Hombase customers stay inside
Garden sales dropped 20% in March at Homebase, the UK-based DIY chain owned by Australian conglomerate Wesfarmers.
Over the first three months of 2018, the company’s total sales growth plummeted by 15.4% compared to the same period in 2017.
Wesfarmers, based in Perth, pointed to the cold weather as the culprit behind a lack of demand for plants and garden tools and furniture.
It had been busy converting Homebase into Australia’s own low-price DIY chain Bunnings, with 23 of 253 stores already overhauled, but earlier this year the managing director Rob Scott said Wesfarmers was now considering putting a stop to its plans.
Debenhams stores frozen shut
The multinational retailer was forced to temporarily close 100 stores during the freezing cold spell and sales growth in March was 2.2% down from the previous year.
Its profit drop of 84% (£13.5m) was part of a wider hit to the retail market, which totalled a fall of 1.2% in UK sales volumes in the same month.
Debenhams forecasts its profit for the whole of 2018 to be somewhere between £50m and £61m – more than £30m down from last year.