NEW YORK — Hurricane Frances’ destructive path through Florida during the Labor Day weekend cost Federated Department Stores an estimated $20 million in sales, the company said on Tuesday, as retailers began to tally the impact of the storm on their bottom lines.
Merchants had been counting on holiday shopping to help boost overall September sales, particularly since August’s same-store sales results were the weakest in more than a year. Analysts have speculated that one reason August sales were so weak was because consumers are shopping closer to the start of school.
Federated said September comps — sales in stores open at least a year — should be reduced by 1.5 percent and third-quarter earnings per share are expected to be 3 cents to 4 cents lower than earlier guidance. The company had previously forecast earnings of 35 cents to 40 cents a share in the quarter; the Wall Street consensus is for a profit of 39 cents.
Frances was the second part of a one-two meteorological punch, even as Floridians brace for Hurricane Ivan, which is churning across the Caribbean. Last month Hurricane Charley hurt Federated’s August same-store sales, which were down 2.4 percent. The company operates stores under the Burdines-Macy’s and Bloomingdale’s nameplates in Florida.
Each of Burdines-Macy’s 57 Florida stores were closed for a period during the past five days, a spokeswoman said. Six stores remained shut on Tuesday because they lacked power. Most stores were closed at least two days as the storm moved northwest and into the Florida panhandle.
Federated’s stores in southeastern Florida and the Orlando area began closing on Thursday. The impact of the storm began to be felt on Wednesday as sales dropped because people were preparing for Frances. An accurate picture of the hurricane’s effect is likely to take several weeks to fully assess.
“We’re only a couple days into this month….It is a modest negative and not of a degree that should have a first-order impact on the outcome for the month,” said Mark Miller, an analyst at William & Blair & Co.
However, Richard Hastings, an economist and retail analyst at Bernard Sands, wasn’t so confident. He lives and works in Charlotte, N.C., and said that his area was hit Tuesday with flash-flood and tornado warnings because of the downgraded Tropical Storm Frances.
This story first appeared in the September 8, 2004 issue of WWD. Subscribe Today.
“We’ll definitely see some disruption during the week,’’ he said. “Clearly, the chronic tropical storms in Florida now have the possibility of fractionally decreasing retail sales for the month of September.”
Retailers need to closely monitor the path of Hurricane Ivan. “It has the risk of going up to the Gulf of Mexico,’’ Hastings said. “There has been enough tropical storm activity to influence retail sales and shift consumer spending, maybe enough to shave a half a percentage point off of chain store sales for September.”
Wal-Mart backed its previous positive 2 to 4 percent estimate for September same-store sales on Tuesday, while saying that sales at stores in Frances’ path were likely to have been hurt. Offsetting the hurricane, Wal-Mart said, was the increase in sales of storm-related products such as batteries, matches and candles. The world’s largest retailer expects to see a boost in sales as customers recover from the hurricane.
A spokeswoman for Wal-Mart said that 23 Florida outlets were still closed Tuesday. Units had minor damage and no employees were injured. A total of 150 stores were closed for a time over the weekend.
Saks Inc. said its Florida stores were closed between one and five days, including 11 Saks Fifth Avenue units, four Saks Department Store Group stores, which encompass McRae’s, Proffitt’s and Parisian divisions in the southeast, and five Off 5th stores.
Two Saks Fifth Avenue stores remained closed because of power failures in Palm Beach Gardens and Palm Beach. All others returned to normal schedules. The company has not released details regarding Frances’ impact.
— With contributions from Vicki M. Young