ATLANTA — Federated Stores projected a 2.1 percent decline in same-store sales for September compared with a year ago because of the hurricanes that have battered Florida, and apparel sales are suffering short-term damage.
Federated estimated $30 million in lost sales because of the storms, especially Frances and Jeanne, which hit Florida’s southeast coast. The state has 57 Burdine’s-Macy’s and five Bloomingdale’s — a significant chunk of Federated’s 450-total store operation. The company estimated third-quarter earnings will be down 4 to 6 percent.
Analysts said mainstream department stores, especially Federated and J.C. Penney, with 55 of its 1,021 stores in Florida, would probably suffer the worst immediate losses. Clothing is expected to be low on most consumers’ priority lists through October, when business should return to normal levels.
Discounters and home improvement and sporting goods-camping retailers should see a quick sales boost as customers undertake repairs in the aftermath of hurricanes Frances, Charley, Ivan and Jeanne, the experts said. In the long term, higher-end department stores, such as Neiman Marcus and Nordstrom, will benefit from a rebound as consumers look to shopping and fashion as a respite from hurricane fatigue. Less essential home items also should perform well, as residents look to replace or redecorate.
Big-box retailers “and discounters will get immediate benefit in affected areas,” said Cynthia Cohen, president of Strategic Mindshare, a Miami-based retail consultant. “As for clothing, people digging through rubble are more likely to buy cotton items from Target or fleece from Sports Authority than an Ellen Tracy suit.”
A Wal-Mart spokesman said a total of 120 stores had been affected in the Southeast, either by closings or limited hours due to curfews. The net effect on sales will be a “mild accretion” that adds slightly to the chain’s bottom line.
Florida is the first state to get hit by four hurricanes in one season since Texas in 1886. There are another two months remaining in the 2004 hurricane season.
Businesses in the state suffered an estimated $11 billion to $13 billion in structural damage from the hurricanes, said Rick McAllister, president and chief executive officer of the Florida Retail Federation, a statewide trade association of 10,000 members.
This story first appeared in the September 28, 2004 issue of WWD. Subscribe Today.
“You can bet dollar figures in losses will match that figure,” he said, adding that smaller retailers in strip centers suffered more losses than major malls.
The worst problem at retail has been disruption of business because of power failures and structural damage, McAllister said. Much of Pensacola, for example, is without power more than a week after Hurricane Ivan.
Despite the onslaught, the timing and location of the hurricanes could have been worse for Florida retailers. Major metropolitan areas, including Miami, Orlando and Tampa, with the most concentrated higher-end retail centers, escaped the brunt of the storms. In addition, September isn’t a big tourist month.
“We don’t expect luxury retail to be behind the eight ball because of this,” said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C. “Palm Beach’s Worth Avenue didn’t have significant damage, and it wasn’t the high season yet.”
Luxury and fashion segments are already seeing a bounce back, Cohen said.
“At Neiman Marcus and Nordstrom, fashion shoppers are already coming back with a vengeance in South Florida,” she said.
The storms’ impact on tourism, a primary driver of retail, is yet to be seen. Before June, Florida was on track for its biggest tourism season since 9/11 devastated travel to the state.
According to Visit Florida, the state’s tourism bureau, January to June tourism figures were up 8.3 compared with last year, based on airline and automobile travel statistics.