Hurricane Sandy: Beauty’s New Grinch?

Halloween was hit hard, but now executives wonder if Sandy will steal Christmas.

NEW YORK — What a difference a week makes.

This story first appeared in the November 2, 2012 issue of WWD.  Subscribe Today.

Last week, WWD reported mass-market retailers were gearing up for one of their most robust holiday seasons in years.

Then came Superstorm Sandy.

Efforts shifted to disaster relief as retailers scrambled to stock supplies ranging from water to batteries.

Halloween was hit hard, although the rush to sell batteries, water, flashlights and other needs offset some candy and decorating losses.

But, now executives wonder if Sandy will steal Christmas.

Charting the course for the upcoming holiday season is as difficult as predicting the path of a storm, buyers and manufacturers said. Most have downgraded holiday expectations from gains of 6 percent in beauty to more modest 3 to 4 percent increases.

No one debates that residual damage from the storm will impact not only Americans’ moods. However, those in the beauty business hope there is enough time between the disaster and actual shopping that spirits will be brighter and that the beauty category will offer a cheery gift idea.

There are signs that consumers want to get back to shopping.

Already, retailers told of shoppers — many who had been stuck inside without power —venturing out to stores for needs or just to see neighbors.

RELATED STORY: Retailers Slowly Reopen in Sandy’s Wake >>

A Walgreens in Hillsborough, N.J., was operating with limited power — welcoming throngs of customers, many of whom said they couldn’t be cooped up any longer. Restaurants had two-hour waits as residents sought warmth, light and food. Target stores allowed people to charge phones and use Wi-Fi.

Much of November sales gains will hinge upon how many stores the major chains can open, and how fast they can do it. And, of course, online commerce depends upon people getting Internet access restored. Estimates from Planalytics, a weather-related planning organization, said most national U.S. chains have at least 10 percent of stores in affected markets. Some suppliers estimated the markets hardest hit account for 15 percent to 20 percent of their beauty sales.

By the end of Wednesday, Walgreens said that more than two-thirds of the 750 stores initially closed due to the storm had reopened, leaving only 239 still closed. More than a dozen were open without power and 55 were open despite light or moderate damage. Numerous stores are operating with electric generators, 180 of which were stationed in advance of the storm for rapid deployment. Walgreens has nearly 1,400 stores in the impacted area.

CVS said it was down to 68 closures. Rite Aid said the vast majority of stores are open.

Beauty executives — both manufacturers and buyers — were getting back to work Thursday, crafting plans to put Christmas back on track.

“I think over the next four to six weeks, beauty sales will be down considerably,” said Barry Shields, managing partner in Innovative Beauty Group. His company produces Red Carpet Manicure, a line poised for a huge sales explosion this holiday, according to retailers. “I think women’s priorities in this area [hit hardest by the storm] will be to care for their families,” said Shields. However, he added that while “the majority of household discretionary spending may go to other more important items like a new roof or tree removal, the idea of a ‘pick-me-up treat’ from a cost effective beauty item won’t go away.”

Shawn Haynes, vice president of retail sales at E.l.f. Cosmetics, believes that the time in between healing from the storm to actually shopping could help. “There is enough time to put the storm behind us, the weather to cool off and consumers to get out and shop,” he said. That might dash chains’ plans to get Christmas sales churning early and buyers did admit they may have to slash prices sooner than planned.

One retail executive said it is too soon to call Christmas. “We took a hit at Halloween because the storm happened on the highest volume days [for candy]. The result will be based on how many stores reopen. Christmas depends on when life gets back to normal.”

Retailers were quick to add they felt lessons from past storms helped them gear up in the right locations with merchandise to help people prepare. Also, at press time, several hoped for a sales blip on candy as towns rescheduled Halloween trick-or-treating for over the weekend.

On the supplier side, there are some fears of production problems — a situation other categories, which are produced in other parts of America, or the world, won’t experience. Some beauty companies said their plants are without power and water, halting manufacturing.

The nation’s retailers are already jumping in to help, with Walgreens, CVS and Rite Aid among those earmarking funds to aid relief efforts.