Hobby Lobby Discounts Outweigh Dismay Over Court Ruling

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While Hobby Lobby Stores Inc.’s customers may disagree with the retailer’s stance on contraception, they aren’t changing their shopping habits or seeking their craft supplies elsewhere.

“I’m a supporter of reproductive rights, but the ruling doesn’t really impact me much in terms of where I’m going to shop,” Suzie Frazier, 43, said yesterday outside a Hobby Lobby in Canton, Michigan, west of Detroit, as she prepared to buy sidewalk chalk for her son. “Yeah, it’s disappointing that Hobby Lobby feels that way, but if they have something I need that others don’t, I’ll shop there.”

The closely held store’s right to refuse to pay for employees’ birth control because of religious objections was affirmed by the U.S. Supreme Court this week.

Frazier isn’t alone. The Oklahoma City-based company’s sales have outpaced competitors such as Michaels Stores Inc. and Jo-Ann Stores Inc. in the last year as the case wound its way through the U.S. legal system. The Supreme Court’s decision capped a 22-month battle by the purveyor of plastic flowers and children’s crafts against a provision of the Patient Protection and Affordable Care Act that its health plans cover birth control without cost to their workers.

Photographer: Pete Marovich/Bloomberg

The legal team representing craft-store chain Hobby Lobby Stores Inc. celebrates on the steps of the U.S. Supreme Court after a ruling is announced in Washington, D.C., on June 30, 2014. Close

The legal team representing craft-store chain Hobby Lobby Stores Inc. celebrates on the... Read More

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Photographer: Pete Marovich/Bloomberg

The legal team representing craft-store chain Hobby Lobby Stores Inc. celebrates on the steps of the U.S. Supreme Court after a ruling is announced in Washington, D.C., on June 30, 2014.

Customers Forget

As difficult a road the company seems on now, with Hobby Lobby jumping from newspaper sales inserts to the front page, U.S. shoppers often quickly forget controversy unless the merchant makes efforts to remind them, said Laura Ries of Ries & Ries, a brand strategy company in Atlanta.

Customers moved past the 2009 YouTube videos of employees spitting and otherwise defiling Domino’s Pizza Inc. (DPZ) food, she said. Domino’s sales have risen each year since. Chick-fil-A Inc. is still selling sandwiches after taking a controversial stance against gay marriage in 2012, she said.

Even General Motors Co. (GM), which has said that flaws in its vehicles that went unfixed for a decade led to needless deaths, is “chugging along,” Ries said. GM June U.S. sales rose 1 percent yesterday, surprising analysts who expected a 6 percent decline and remain up 2.5 percent for the year after more than 29 million recalls.

“As big as these stories start out, they burn out over time,” she said. For Hobby Lobby’s conservative customers, it’s even less likely to resonate, she said.

And the court ruling didn’t create any real losers, said Mark Goldfeder, a senior lecturer at Emory University School of Law in Atlanta and an adjunct professor for Emory’s department of religion.

Photographer: Joe Raedle/Getty Images

Customers enter a Hobby Lobby store in Plantation, Florida, on June 30, 2014. The Oklahoma City-based company’s sales have outpaced competitors such as Michaels Stores Inc. and Jo-Ann Stores Inc. in the last year as the case wound its way through the U.S. legal system. Close

Customers enter a Hobby Lobby store in Plantation, Florida, on June 30, 2014. The... Read More

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Photographer: Joe Raedle/Getty Images

Customers enter a Hobby Lobby store in Plantation, Florida, on June 30, 2014. The Oklahoma City-based company’s sales have outpaced competitors such as Michaels Stores Inc. and Jo-Ann Stores Inc. in the last year as the case wound its way through the U.S. legal system.

“It ruled in a very win-win way,” he said. “They found a way to do this without burdening any religious beliefs, without violating any compelling government risk and without taking away any employee entitlements.”

Convenience Counts

Lisa Buchinski, a special education teacher from Piscataway, New Jersey, said convenience outweighs any other sentiment for her because the rival Michaels store is too far away. Hobby Lobby has never made a secret of its views, she said. She said she has sympathy for employees without having a strong opinion either way on the ruling.

“As soon as you walk into the store, it’s very religious,” she said in an interview yesterday outside a location in South Plainfield, New Jersey, about 30 miles (48 kilometers) southwest of New York City. “That’s why they aren’t open on Sundays. They have wonderful stuff if you’re a crafter, and there is no other store around.”

For Linda Zushma, a retiree from South Plainfield who was angry about the ruling, the local location will only remain on her itinerary when she absolutely needs something from the store -- otherwise she will travel the extra distance to the closest Michaels. She was at the Hobby Lobby with a friend who continues to shop at the store.

New Generation

“It took a lot for me to come here today,” Zushma, 65, said in an interview at the Hobby Lobby store. “A corporation is a corporation. They shouldn’t have any say. I mean really, come on, this is a new generation, a new era.”

The Twittersphere was rife with outrage after the decision from some factions, including several references to burning down Hobby Lobby stores and suggesting the chain also supported the immolation of witches among its beliefs. Still, the so-called hashtag war was trending in the craft store’s favor overall among posts on Twitter Inc. (TWTR) microblogging site.

Positive Tweets

Through midafternoon yesterday, #ReligiousFreedom, the hashtag in support of Hobby Lobby was trending with a 69 percent positive sentiment among 8,800 tweets using that label, according to Topsy.com, which tracks and evaluates Twitter postings. The hashtag #NotMyBossesBusiness had a sentiment of 43 out of 100 among 3,098 tweets, Topsy.com said.

“Retweet to agree, today’s #SupremeCourt decision is a victory for #ReligiousFreedom. #HobbyLobby,” U.S. House Speaker John Boehner tweeted on June 30, the day of the decision.

The White House countered with the message “Women should make personal health care decisions for themselves,” and included #NotMyBossesBusiness.

Hobby Lobby had sales of about $3.3 billion last year, a 10 percent increase from a year earlier, according to Forbes, which ranked the retailer 135th among America’s largest private companies. Closely held Jo-Ann’s sales rose about 5.9 percent to $2.33 billion in the same period, to rank 202nd, Forbes said.

Michaels revenue rose 3.7 percent to $4.6 billion in 2013, according to a regulatory filing related to an initial public offering in June.

The court decided in a 5-4 vote in favor of the suit brought by Hobby Lobby, with 600 craft stores with at least 15,000 full-time employees, and Conestoga Wood Specialties Corp., an East Earl, Pennsylvania-based company owned by a Mennonite family.

Drugs Excluded

While both companies’ employee health plans cover most contraceptives, they exclude two drugs the companies’ owners believe cause abortions, Teva Pharmaceutical Industries Ltd. (TEVA)’s Plan B One-Step and Actavis Plc (ACT)’s Ella, and some intrauterine devices.

Plan B is available over-the-counter to girls as young as 15, meaning workers who can afford the drug’s retail price --the pill costs $49.99 at Drugstore.com -- needn’t seek a prescription or use insurance coverage. Ella requires a prescription.

“Everyone will get what they are entitled to, just someone else, a third party, probably the government, will have to chip in and pay,” said Emory’s Goldfeder, who is also director of law and religious student programs at the university. “I think Hobby Lobby is counting on the fact that people will realize that and calm down. It was blown way out of proportion.”

That’s the case for Scott Nelson. While Nelson said he leans in opposition to the ruling, the 54-year-old is “ambivalent” about it since the bargains at Hobby Lobby draw him in. The Hobby Lobby location in Canton, Michigan, is within a mile of both a Michaels and Jo-Ann location.

“When I shop, I think about one thing: What’s the price? That’s it,” said Nelson, who was picking up a new stapler to replace a broken one in his home office. “Hobby Lobby has some decent prices, so unless they’re taking some extreme views on things and acting on them, I see no reason to stop shopping here if I need something and the prices are decent.”

To contact the reporters on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; John Irwin in Southfield, Michigan at jirwin25@bloomberg.net; Selina Wang in New York at swang533@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net Bruce Rule, John Lear

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