×

Watch for executives to blame the late Easter for any weak first-quarter earnings

  • With Easter shifting back to April from March this year, first-quarter results are going to look weak when compared to last year.
  • Disney executives said the Easter shift will cost the company about $50 million in operating income.

Blame it on the bunny.

Every year, dozens of companies reference the Easter holiday in their earnings conference calls. From lingerie to soft drinks to airline tickets, companies across the S&P 500 expect to get a basketful of extra revenue from the holiday in late March or early April, but it doesn't always work out.

Any company expecting a boost in the first quarter like we saw last year is counting its Easter eggs before they hatch. That's because the holiday doesn't fall in the same quarter every year — instead, it's on the first Sunday after the first full moon occurring on or after the vernal equinox. That means it could be any day between March 22 and April 25. This year, it's April 16.

Last year was special, with the holiday falling in March, as it also did in 2013 and 2008. With Easter shifting back to April this year, first-quarter results are going to look weak when compared to last year. Executives will be sure to throw the Easter bunny under the bus.

Some companies, like Hershey, mention Easter in nearly every earnings call they hold. That's not surprising, considering that Americans will buy hundreds of millions of dollars worth of candy in that single week alone and Hershey owns some of the most popular Easter candy brands. Mondelez and the two largest toy companies are also quick to reference the holiday, along with airlines, hotels and major retailers.

But other companies are more surprising. Disney has mentioned Easter more in the last 10 years than any company but Hershey, usually in reference to its theme parks. In its February earnings call, Disney executives said that the Easter shift will cost the company about $50 million in operating income in the next quarter. Guests apparently show up for Easter-themed events.

Many people celebrate Easter with a big family dinner, so its inter-quarter shift can have a major impact on food manufacturers. McCormick & Co., for example, which makes spices and dried herbs, blamed the Easter shift for weak consumer sales.

"It does seem that there were some events that would have created a shift versus prior year, timing of Easter being one, weather being another," said president and CEO Lawrence Kurzius. "Lent had a big impact on us. Our business has a very high index to Hispanic consumers, who are more Catholic, the later Easter made all of Lent fall outside of the quarter."

Easter earnings

The timing of Easter can also signal the start of a strong sales season for some retailers. Tractor Supply, for example, noted that an earlier Easter is better for the company.

"Compared to some of the other retailers, that shift is less impactful," said CFO Anthony Crudele on a 2011 earnings call about the latest Easter since 1943. "We do believe that it does signal to many of our customers that it's time to get out and work the fields and do their gardening, and the lawn season, so we think that there will be a clear acceleration as we hit that mark."

Alcohol purveyors Molson Coors and Constellation Brands also told investors that Easter could account for higher sales. Easter benefits for the company are stronger in Canada than in the U.S., and even stronger in Europe, because Canada generally has a three-day holiday and Europe has a four-day holiday, according to Molson Coors Global Vice President Dave Dunnewald. Constellation Brands CEO Robert Sands noted that Easter is a time for wine and liquor.

"That's really going to affect the numbers that you're going to be looking at on a short-term basis," he said of the shift from March to April on the company's earnings call this month. "Especially on wine and spirits because it tends to be more of a wine and spirits drinking holiday than a beer drinking holiday."

Shoppers said they were more likely to buy their Easter gifts at discount stores than anywhere else, according to a National Retail Federation survey, which explains the frequent mentions by companies like Dollar Tree, Dollar General and larger outlets like Target and Walmart.

Not only is Easter good for alcohol, but consumers use the holiday as an excuse to stock up on other goods like underwear and cigarettes. Philip Morris International and Altria Group have mentioned the holiday in earnings reports, as have Hanesbrands and L Brands, owner of Victoria's Secret. Other companies that have mentioned Easter are Starbucks, Whole Foods, McDonald's, Thermo Fisher Scientific, News Corp and Coach. In the last 10 years, the holiday has been blamed by companies in every sector but one — telecommunications companies haven't made a peep.

Despite all the airing of Easter grievances, the spending is small compared to other major holidays. Surveys of total spending by the National Retail Federation put that number at $18.4 billion for this season. That's somewhere between Mother's Day and Valentine's Day, and about three percent of what the winter holidays bring in. The "back to school" sales season brings in four times as much.