Same Hurricanes, Different Stories

This year, three hurricane eye walls have passed within 35 miles of my home. Charley and Frances were problems, but they produced only minor flooding. Jeanne ripped tiles off the roof, took down many large trees, and created weeks of cleanup.

To see the varying impacts these storms had on corporate America, look at Rocky Shoes & Boots (Nasdaq: RCKY  ) and Jo-Ann Stores (NYSE: JAS  ) .

Rocky Shoes, besides having an odd name for footwear, had eight consecutive quarters of higher net income. For 2004, the company expected sales to increase 20% and earnings to rise 32% -- and then came hurricane season. With company facilities in the Dominican Republic and Puerto Rico, the stock has acted like it was running into a stiff breeze.

The storms have passed, and Rocky Shoes reaffirmed its third-quarter earnings guidance. Although the storms knocked out power for several days, the facilities did not have severe structural damage. The company, selling for 13 times earnings, has positive free cash flow and rising operating margins.

With 4.6 million shares outstanding, Rocky Shoes is tiny compared with competitors Timberland (NYSE: TBL  ) and Wolverine World Wide (NYSE: WWW  ) and sells for a much lower price to earnings. The stock is off 38% from its January high, so the storm discount provides a value price for new investors to consider.

Unlike a manufacturing operation that can work overtime to recover from lost production, retailers such as Jo-Ann Stores are hit hard when stores close for days because of weather. Making Jo-Ann Stores' problems worse is the company's marginal overall performance during the third quarter. The combination is a one-two punch that would rock even Rocky Balboa.

Jo-Ann Stores looked like it was on the mend earlier this year. And, for 2004, the company still expects to increase earnings by at least 9%. But with 1% profit margins, the company needs to make the most of this holiday season to help keep its balance sheet improving.

Competition such as retailer-to-all Wal-Mart (NYSE: WMT  ) and more focused peers Hancock Fabrics (NYSE: HKF  ) and Michaels Stores (NYSE: MIK  ) will keep the pressure on Jo-Ann Stores to perform -- stormy weather or not.

For more material, see:

• Jo-Ann Patches Things Up
• Michaels Splits, Doesn't Fray
• Ragging on Rag

The Motley Fool is investors talking to investors. Discuss Jo-Ann Stores and Rocky Shoes & Boots -- and thousands of other stocks -- on the Motley Fool discussion boards.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned. W.D., without landline phone service since Hurricane Jeanne, is looking forward to Nov. 30 -- the end of hurricane season.