LOS ANGELES -- Just as the struggling California economy seemed to be sputtering along the road to recovery, along came the Great Quake of '94. It not only became the costliest natural disaster in American history, but it effectively choked off the...
LOS ANGELES -- Just as the struggling California economy seemed to be sputtering along the road to recovery, along came the Great Quake of '94. It not only became the costliest natural disaster in American history, but it effectively choked off the momentum that many retailers were just beginning to feel.
The state's economy -- not in the strongest condition even before the Jan. 17 earthquake that was epicentered in Northridge -- underwent severe trauma. The event has had a profound effect on business for many apparel retailers, cutting volume in some stores since then by more than half. The latest blow was especially painful to shopkeepers who had a stronger-than-expected Christmas and post-holiday season.
A number of chains have been affected by closed stores. Robinsons-May was crippled by seven closings in the Los Angeles area: West Los Angeles, Baldwin Hills and Topanga, and two units each in Northridge and Sherman Oaks. Of the six San Fernando Valley stores, only the North Hollywood unit has reopened. May Company officials declined to comment on how the earthquake affected its California business.
It might be a year before Bullock's can reopen units in Northridge and Sherman Oaks. The two stores were strong performers for the chain, ringing up more than $70 million in annual volume.
Michael Steinberg, chairman and chief executive officer of Macy's West/Bullock's, said business has picked up in nearby units, such as Woodland Hills and Burbank, but he admitted the boost won't make up for the losses. Business since the quake has picked up slowly, Steinberg said, but much of that has come from housewares and glassware -- two categories that needed almost total replacement in quake-ravaged homes.
Steinberg said he expects it to take months, however, before apparel rebounds in the affected areas.
"When you've lost your home, you don't mind sitting around in the same pair of jeans," Steinberg said.
"There are a lot of issues affecting the economy out here," said David Reichert, regional manager for 21 Kmart stores in the Los Angeles area. "But we had a good year last year -- better than I ever thought it would be -- more in hard goods than in apparel. Business had started to come back even before the earthquake, and it has been exceptionally good after. Demand has been tremendous."He said gains were "significant," in double digits, and noted that as a discounter, Kmart would do well in a down economy.
Reichert added that all Kmart stores in the quake area had been reopened; only four were closed for more than one day.
"Anything people had that was breakable, broke," he said. "Consumers were in the stores the day after the earthquake to replace household items, especially appliances, dishes and glassware, plus anything for emergency preparedness, like batteries, nonperishable food, flashlights. There's also been a pickup in clothing, footwear and bedding. We're starting to see a lot of vouchers from the Red Cross, Salvation Army and FEMA [Federal Emergency Management Agency]."
At I. Magnin, some stores are down more than 12 percent, while stores in Beverly Hills, San Francisco, Pasadena and Newport Beach are trending better than average. Chairman and ceo Joseph Cicio said California's recent disasters and continued high unemployment have made retailing difficult.
"The whole state is hurting," he said.
Cicio noted that orders from Magnin's spring catalog, mailed last week, were up 12 percent from last year, an indication that more people might be shopping from home.
While larger stores such as Bullock's, The Broadway and I. Magnin can boost advertising to stimulate business, smaller boutiques have devised innovative methods to bring in the orders.
In the Nicole Miller boutique in West Hollywood, for example, manager Julene Campion has been photographing the new collection, pasting the Polaroids on paper with cloth swatches and sending them to good customers. These mailers, along with a more intensified telephone sales campaign, has helped make up for the loss in foot traffic in the store.
"The second week after the earthquake, we did $20,000," Campion said. "More than half of that was on the phone since people weren't driving because of the closed freeways."
At Theodore, a specialty retailer with six units in the Los Angeles area, business is volatile. Sales during the second week of February were up 20 percent from last year, following a week that was about 30 percent below last year's levels."People ask me what the earthquake did to the economy and I say, 'What economy?"' said owner Herb Fink. Fred Hayman, owner of a Rodeo Drive signature boutique, said business has recovered some since the quake, but he said he could not quantify how much volume he lost because January and February usually are slow months. "The economy had picked up; we were on the road to recovery, and this one comes along and sets us back," Hayman said of the temblor.
While the impact of the earthquake is felt most severely in Los Angeles and, in particular, the San Fernando Valley and parts of Santa Monica, the effect of the quake on the state's economy may not be that bad after all, said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.
"When you look at the numbers, it's going to be a blip in first- quarter results," he predicted.
Kyser said $9 billion in federal aid and $2 billion in insured losses have helped "jump-start" construction and related industries. Tourism, which was thought to take a severe blow from publicity surrounding the quake, also will be affected less than first believed, Kyser said. He said initial studies through hotel bookings and related statistics show that this year, the area will suffer a loss in tourism of just 3 percent to five percent from the quake, and most of that will be concentrated in the first quarter.
Kyser said economic signs show a current recovery in the central valley of California, a "bottoming out" in the San Francisco Bay Area and a late-1993/early-1994 beginning for a recovery in the Los Angeles area.
At Mervyn's, which had 12 stores hit by the quake, with one -- in Northridge -- still closed, business in the quake-area stores has actually outpaced other California stores the past several weeks, said Denny Chantland, Mervyn's executive vice president. Business in earthquake-area Mervyn's stores has been strong in housewares, glassware and bedding.
"People didn't lose their wardrobes," Chantland said.
Mervyn's store results, so far this year, have been slightly ahead of plan, leading Mervyn's officials to expect a volume increase this year from 1993.
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