Retailers up and down the East Coast hustled to get hurricane-affected stores back operating Monday and succeeded in most locations except those hit by power outages or floods.
Now they’re assessing the impact of Irene, which took a toll on back-to-school sales but caused little property damage on an individual company basis. Retailers got off relatively easy, but there could be bad news ahead.
“There’s another storm off Africa coming this way. It’s way too early to say where it’s going, but there are more behind it,” said Scott Bernhardt, chief operating officer of Planalytics Inc., which tracks the weather and helps retailers plan accordingly. “We are just entering the peak of the hurricane season,” which runs from mid-August to mid-October, Bernhardt said, adding, “We’re gearing up for an active season and only at the beginning.”
While details on the sales impact will emerge Thursday when many retailers report August sales, Irene landed during “a pretty significant back-to-school weekend,” noted Joe LaRocca, senior asset protection adviser at the National Retail Federation. “Even though the urban population was not directly impacted — New York City was spared, as was D.C. and Philadelphia for the most part — suburban markets did take a pretty significant amount of damage and loss of power.…Even if you are not a back-to-school store, you still have a lost sales opportunity and you may never make that up.”
The consensus among retail analysts was that, as with previous major weather events, home retailers such as Home Depot and Lowe’s as well as supermarkets, convenience stores, general merchandisers such as Wal-Mart and Sears, quick service restaurants and anything with a drive-through got a sales boost from Irene. On the other hand, department stores and apparel stores suffered.
Planalytics said batteries, bottled water, canned foods, ice, generators, pumps, chain saws, house restoration items like paint, trash bags, mops, buckets and tarps will be most in demand in coming days.
The financial markets on Monday were buoyed by the stocks of insurance companies, which could have suffered steep losses if the damage from Irene had been worse. The S&P Retail Index rose 2.5 percent, or 12.32 points, to 511.11 as the Dow Jones Industrial Average increased 2.3 percent, or 254.71 points, to 11,539.25. Among the retail gainers were Abercrombie & Fitch Co., up 7.2 percent to $63.45; Saks Inc., 6.3 percent to $9.74; Nordstrom Inc., 6.2 percent to $44.70, and Chico’s FAS Inc., 4 percent to $13.93.
Peter Morici, professor at the Smith School of Business at the University of Maryland, estimated that the storm wiped out between $1.1 billion and $1.5 billion in retail sales, based on models showing the Eastern Seaboard responsible for 25 percent of U.S. economic activity and about $5.4 billion in retail volume, excluding automobiles, during the two-day weekend. The impact was “uneven across sectors,” he said. “The same amount of clothing is going to get sold, but more of it will be at a discount.”
Stifel, Nicolaus & Co. Inc. sees both depressed sales and a build-up of inventory due to Irene, triggering increased promotions and leaner margins. The research firm noted that only Saturday’s sales are included in August’s comps and Sunday’s lost sales will negatively impact September’s comps. “By our estimation, approximately 25 percent of national retail sales occur in the hurricane-affected areas and we estimate that 25 percent of the week’s volume was lost,” the company said in a report. “With week 4 contributing approximately 30 percent of August sales, we estimate a negative impact of approximately 1 to 2 percent to August comparable store sales.…We believe Labor Day weekend will be even more promotional than usual, likely negatively impacting September margins.”
There are those who believe the impact will be minimal. Margaret Whitfield, retail analyst at Sterne Agee, commented: “While last week’s traffic data from ShopperTrak was down 2 percent, last Saturday’s traffic, which ended the month, was off only 1.2 percent, which was encouraging. I now live in northern Virginia and the storm’s impact in Washington was less than advertised. Hopefully, lost back-to-school sales will be made up this coming weekend.”
Craig Johnson, president of Customer Growth Partners, said the effect of Irene on retail will be “net neutral to slightly positive” because of the “temporal displacement factor” where purchases made prior to a widely predicted weather event, such as plywood, generators and extra groceries, and those made afterwards, such as gas-powered chain saws and replacement furniture, compensate for business lost during the event itself.
“Johnny and Suzie are still going to get outfitted for back-to-school, and they’re still going to get their iPad,” Johnson said. “And if someone was scheduled to get a Little Blue Box from Tiffany, they’re still going to get their Little Blue Box. Americans are very resilient, and the American consumer is even more resilient.”
Retailers were working quickly to get things back to normal. Simon Property Group Inc. said only five centers remained closed Monday, mainly because of power issues, after 24 on the Eastern Seaboard closed Sunday. Still closed Monday afternoon were Walt Whitman Mall in Huntington Station, N.Y., Menlo Park Mall in Edison, N.J., Williamsburg Premium Outlets in Williamsburg, Va., Clinton Crossing Premium Outlets in Clinton, Conn., and Jersey Shore Premium Outlets in Tinton Falls, N.J.
Wal-Mart Stores Inc. reported Monday morning a total of 49 Wal-Mart and Sam’s Club stores closed and no significant damage. At peak, there were 298 stores and clubs that were closed due to the hurricane. As of Monday afternoon, Wal-Mart reopened 263 of those stores and clubs.
Saks Fifth Avenue said all stores that closed due to the hurricane, including the Manhattan flagship, reopened on Monday, except for the Walt Whitman, Bergen, Short Hills and Richmond units that lost power. There was no material damage to property. Eight full-line stores and seven Off-5th units were closed Sunday and most of those closed early Saturday.
The Nordstrom store in Menlo Park, N.J., remained closed Monday due to power outage at the mall. The Seattle-based retailer said a few stores had minor leaks but none preventing openings.
Macy’s said 17 locations, including three Bloomingdale’s, couldn’t open Monday, largely due to electricity issues or local flooding. Macy’s Inc. spokesman Jim Sluzewski acknowledged some staffers couldn’t get to work because of transportation difficulties or downed trees or floods at home, but the Herald Square flagship was operating normally with some staff shifts across departments.
Belk Inc. said 22 stores (17 in eastern North Carolina, four in Virginia and one in Maryland) were closed over the weekend or had reduced hours. By Monday, only five remained closed and there was major structural damage at the Elizabeth City, N.C.,and Goldsboro, N.C. stores. Repairs and restorations are under way.
According to Planalytics:
• Irene peaked as a category 3 hurricane, made its first U.S. landfall on Saturday as a category 1, and impacted 17 states and some Canadian cities, including Montreal and Halifax.
• An estimated 80 million consumers were within 200 miles of the eye of the storm at some point over the past week.
• Irene caused over 4 million power outages, with many in the Northeast expected to last up to two weeks.
• Flooding and uprooting of trees by Irene was compounded by what had already been a very wet August in the East.
• An estimated 11,000 flights were canceled and mass transit in all major cities in the path either slowed or stopped.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)