Publicly traded retail specialty chains in the New York City area will feel a sting from the transit strike, but department store players such as Macy's and Saks will likely suffer more, Wall Street analysts said.
NEW YORK — Publicly traded retail specialty chains in the New York City area will feel a sting from the transit strike, but department store players such as Macy's and Saks will likely suffer more, Wall Street analysts said.
In a worst-case scenario — a prolonged strike of two weeks or more — analysts said retailers with the greatest exposure such as Saks Fifth Avenue, Urban Outfitters and Gap, might see December same-store sales drop by as much as 1 percent with little or no impact on the bottom line.
Their thinking is that in the holiday shopping season home stretch, consumers and tourists who shop the city's specialty stores will find a way to get the goods they need — with or without subway or bus service. Their alternate destination? The local mall, of course.
Mark A. Friedman, retail analyst at Merrill Lynch, said in a note to investors that the strike "could make final holiday shopping a little more challenging for some."
Friedman covers the specialty retail segment, and calculated that about 2.4 percent of the U.S. population use New York City transit "on a typical weekday." But these 7 million riders do not include "some tourists and New York regional visitors who do not use mass transit, but may alter their plans to shop in the city during a strike."
"Nevertheless, we believe the impact will be minimal on the publicly traded specialty retailers as many of these consumers will be able to shop locally at the national chains," Friedman said.
Investors, meanwhile, were more concerned about broader economic indicators. Major indices fell Tuesday as investors worried that the Federal Reserve would boost interest rates to tame robust growth in the housing sector. The S&P 500 was down 0.02 percent to close at 1,259.62. But core inflation numbers released Tuesday showed that soaring energy prices have not had any significant impact on the cost of goods.
The S&P Retail Index was up 0.17 percent to close at 460.75. Federated Department Stores finished up 0.69 percent to $65.23 while Saks Inc. was 0.37 percent higher to close at $16.27. Gap Inc. ended down 1.72 percent to $17.69 while Urban Outfitters rose 0.08 percent to $26.56 and Abercrombie & Fitch was up 0.73 percent to $63.47.
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