By  on October 24, 2007

Wildfires in Southern California intensified Tuesday, forcing retailers and apparel manufacturers to close and raising fears about the economic impact of the disaster that has driven more than 500,000 people from their homes.

Hot, high winds blew as many as 15 fires across highways and hills for a third day and consumed more than 365,000 acres, scorching an estimated 1,300 businesses and residences in their paths. President Bush declared a state of emergency to provide federal funds and resources after Gov. Arnold Schwarzenegger requested the support on Monday.

Coping with road closings, damages and staff shortages, companies shut down or set up makeshift operations elsewhere. San Diego, where the fires hit hardest, is a center for action sports retailers and manufacturers, most of which were inactive Tuesday as their employees focused on the safety of their families and properties.

VF Corp.-owned Reef, which has more than 100 employees at its Carlsbad, Calif., headquarters and watchmaker Nixon, based in Encinitas, Calif. — both north of San Diego — are located in evacuation areas and had to halt operations. Swimwear brands Vix, based in San Diego, and Salinas, owned by Solana Beach, Calif.-based Marpessa Inc., although not located in evacuation zones, were shut down because of staff shortages and safety issues. The staff was thin at San Diego-based Charlotte Russe, where chief executive officer Mark Hoffman and marketing director Karin Toranto had not made it to work, an employee said.

Lindy Williams, marketing manager of Reef's women's business, said her 15-member department had been evacuated from their homes, adding that she was not sure when the office would open. "The order has been to be safe," she said. "It's so nerve-racking. It's hard to think about work."

The Westfield Group, owner of seven shopping centers in San Diego County, closed three malls: Westfield North County, Westfield Parkway in El Cajon and Westfield Plaza Camino Real. General Growth Properties closed its Otay Ranch Town Center, but kept open Chula Vista Center.

"The entire Westfield family has been touched by this tragedy," Ken Wong, Westfield Group's president of U.S. operations, said in a statement. "We are part of this community and will do whatever we can to help. We are currently working with local law enforcement, public safety and emergency service organizations to serve as a resource — providing staging areas for first responders at several of our centers."Simon Property Group's three malls in the San Diego area remained open, although the Neiman Marcus store at Fashion Valley has been closed since Monday. A spokesman said Simon executives, based in Indianapolis, met Tuesday to discuss the company's response to the fires. "We are constantly monitoring the situation and it is...very fluid," he said. "The safety of our customers and our tenants and their employees is, as always, our paramount concern."

The economic fallout was difficult to calculate because of the scope, speed and unpredictable manner with which the fires spread. The Santa Ana winds, lack of rain and high temperatures are expected to continue until Thursday, forecasters said. The death toll increased to six.

The wildfires "will have dramatic economic impact," Schwarzenegger said on CNBC. "It will be probably in the hundreds of millions of dollars. But this area [San Diego] has been very resilient."

James Diffley, managing director at Global Insight Inc., an economic and financial analyst and forecasting company based in Waltham, Mass., estimated that San Diego contributes almost 10 percent, or about $100 billion, to the annual value of all products and services generated in California. Using that estimate, the loss in San Diego totals more than $274 million a day.

Diffley added that rebuilding after the fires could give a boost to San Diego's housing market, which has contracted. "Rebuilding perversely spurs the economy," he said. "People who don't spend today because they are obviously displaced will shop later."

Jack Kyser, chief economist and senior vice president of the Los Angeles Economic Development Corp., said, "It's pretty dire down in San Diego due to the magnitude of fires. Obviously, residents are not going to go shopping. In terms of apparel, business is interrupted and workers can't get to work and deliveries can't get made."

Transportation snafus affected trucking and shipping companies and their customers. "The bottom line is this is going to hurt profits and raise shipping charges," said Michael Farraj, president of Route 66 Logistics Inc., a freight brokerage service based in Carson City, Nev.

Lee Selman, owner of Quiet Hero clothing store in San Diego, said she was sequestered in her house. The printing shop that is handling a screen-printing order for her T-shirts closed. "We're not doing much," Selman said."We are at a standstill," said Amber Delecce, vice president of Vix swimwear. "We can't ship. To take a precaution yesterday [Monday], we took out a huge U-Haul to hold all our bikinis. We are more worried about our inventory than our computers."

Elizabeth Samford, owner and designer of ABBL Swimwear, was stuck in her downtown San Diego home even though the fires didn't directly affect it. She was busy trying to track down the operators of a fashion show scheduled for this weekend, but was having no luck because they were based in the Rancho Bernardo neighborhood of San Diego, where fires were roaring.

"I am staying put,'' Samford said. "I have a lot of neighbors, and everyone is staying home. I went to the mall [Horton Plaza] in the Gaslamp District, and a lot of the stores had closed."

Sun Diego, a 10-door surf chain based in Carlsbad, closed four of its stores between San Diego and Temecula, about 60 miles north.

David Cianelli, general manager of the Chula Vista Center, about 10 miles south of San Diego, said three of the shopping center's four anchor stores were open, but Mervyns was closed because of staffing shortages. "It just seems like getting people to come into work has been a challenge," he said. "Everyone has staff people who can't get out of their homes. People have put the economics and business issues aside for right now. It has been so hectic with life safety concerns."

Tim Swart, co-founder of surf retailer Univ in Encinitas, has been closed since Monday. He worried about the smoke damage to his beach shack-like store. "Any little draft is going to bring smoke in," he said. "All the product might be pretty smoked and there is nothing we can do."

Ernesto Navarez, union organizer for the Los Angeles section of the Industrial Workers of the World, said the truck drivers who live in the Inland Empire region east of Los Angeles stayed at home because parts of Interstate 15, a major highway that links San Diego, Los Angeles and Las Vegas, were closed because of the fires. In addition, the strong winds that are fanning the flames are also scaring truck drivers who want to head west from Las Vegas or Phoenix. "The truck drivers are stuck," he said. "They are not driving down the 15."In Malibu, where a fire was 15 percent contained and 4,400 acres had been charred, Mark Geller, operating officer of jewelry retailer and wholesaler Laura M., said the company's store in the Malibu Country Mart was closed. However, he said every time there is a fire, the jewelry store bounces back. "The recovery is relatively quick," he said. "These people are so used to crises. They want to get back to their lives as soon as possible. We have never failed to have an uptick in sales."

Even as fires raged, San Diego's beach communities were experiencing a bit of relief as residents sought the ocean instead of being cooped up at home. A few retailers reported brisk sales from evacuees who fled their homes in fire-prone neighborhoods.

Izzy Tihanyi, co-owner of Surf Diva, in La Jolla, Calif., said she closed the women's and men's surf shop on Monday to ensure her employees were safe. After reopening on Tuesday, she's seen a jump in business from evacuees who fled with just the clothes on their backs and needed to stock up on T-shirts, comfortable shoes, shorts, hats and other apparel to wear in the 80-degree heat.

"It's kind of eerie down here," Tihanyi said. "People still want to go to the beach and go surf or go to the boutique and buy clothes."

There wasn't a big crowd at Raw Clothing in Pacific Beach, but owner Mark Nussbaum agreed that the seaside enclaves have been an appealing destination for many. "People have tended to come to the beach because it is one of the areas that are safe," he said.

— With contributions from Marcy Medina

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