Most Recent Articles In Forecasts and Analysis
Latest Forecasts and Analysis Articles
- Report: Wider Income Gap Between U.S. Consumers
- NPD: 15 Percent of Consumers Plan to Spend More on Holiday Shopping Versus a Year Ago
- Unilever, Inditex, H&M, L’Oréal Rank High in Supply Chain Study
More Articles By
Retailers and fashion firms felt the wrath of Hurricane Sandy, forcing them to shut down stores Sunday and Monday across a broad geographic swath from North Carolina to New England, and to close showrooms, cancel meetings and delay shipments.
This story first appeared in the October 30, 2012 issue of WWD. Subscribe Today.
Closures are likely to continue Tuesday across many areas as the hurricane’s full impact was not expected to be felt until late evening Monday in New York City and surrounding areas. The New York Stock Exchange and Nasdaq will again be closed Tuesday, as will bond markets and all New York transit operations.
The collective impact of the storm is expected to be in the hundreds of millions of dollars in lost business alone and will be reflected in November and fourth-quarter sales reports. That does not include estimates of any damage caused by Sandy.
“Store losses for the eastern U.S. from Atlanta to Boston are probably $350 million a day, but could be as high as $500 million a day,” estimated Walter Loeb of Loeb Associates, a consulting agency. Loeb also said preliminary estimates for lost retail sales at New York City stores could exceed $30 million a day. Most stores, except for a few mom-and-pop shops and bodegas, were closed Monday because mass transit was shut down, making it impossible for employees to get to work. Tourists roamed the Manhattan streets looking for anything that was open.
While not a major fashion-buying period, the storm impacted last-minute sales of Halloween costumes and candy, particularly at mass chains and drug stores, which tend to load up on those seasonal categories, though these same stores could make up some of the slack with sales of hurricane-related cleanup products, dried foods, water, flashlights, batteries and candles, as well as through online shopping across a spectrum of categories. Sears, for example, said tools and generators were flying off the shelves Sunday, while at Kmart, perishable items such as food and water, along with blankets, were in strong demand.
Halloween spending this year was seen at $8 billion, up 3 percent from a year ago, according to a National Retail Federation and BIGinsight survey conducted earlier this year, but that projection may need to be revised due to the storm. Loeb estimated that stores along the Eastern seaboard would lose roughly $10 million connected to Halloween gear and another $10 million in Halloween candy sales at drugstores.
Based on interviews conducted by WWD over the last few days, major retailers seem to have heeded advance warnings of the magnitude of the storm and reacted in advance by communicating with employees through hotlines and e-mails on store closings and contingencies, and by stocking up with survival supplies for consumers in the path of the huge hurricane.
Several senior officials also said Sandy’s impact on business would have been worse if the storm had made landfall later in the week when business picks up, or in November when holiday selling really begins. As one senior retail executive observed: “You never like closing stores, but it is better that this is happening at the beginning of the quarter.”
This is the second major storm to hit the East Coast in late October. Last year on the weekend of Oct. 29, retailers were dealing with an historic freaky snowstorm that crippled much of the mid-Atlantic and Northeast and forever changed perceptions that big snowstorms couldn’t occur before November. Ice and heavy snow brought down trees and snapped power lines, affecting more than three million people, though many malls and stores reported then that they were able to reopen quickly. Because of last year’s storm, the sales comparisons to this year’s may not be so bad.
BIG RETAIL CLOSINGS
Saks Fifth Avenue closed 16 full-line and Off 5th units in New York City and other areas, including the Fifth Avenue flagship. “This isn’t fun and games. We made the decision late yesterday to close the offices as well,” said Stephen I. Sadove, Saks Inc. chairman and chief executive officer. “We boarded up the New York store for protection. We will see what happens. The priority is to keep people safe. It’s important to be cautious.” Sadove had a conference call with his team scheduled for later in the day to discuss the impact and plans for Tuesday.
“The safety of our associates and our customers are our top concerns as we prepare for the impact of the storm,” said John R. Belk, president and chief operating officer of the Charlotte, N.C.-based Belk Inc. “We’ve been tracking the system since last week and held preparation calls with our stores, division offices and our emergency response team throughout the weekend. Our stores are prepared, our response teams are ready to respond if needed, and we’ve staged emergency supplies at one of our distribution centers.”
Belk’s Kill Devil Hills store on the Outer Banks of North Carolina did close at 6 p.m. Sunday, and reopened on time Monday, and a California, Md., store closed Monday at 2 p.m., while the Westminster, Md., unit was set to close around 4 or 5 p.m., and the Williamsburg and Fredericksburg, Va., stores were considering closing at 5.
At Bergdorf Goodman, “We closed at 5 p.m. Sunday, an hour earlier than our normal closing time, so that associates could get home safely in advance of the transit closures,” said store president Joshua Schulman. “We remain closed today [Monday] and will continue to monitor the situation. We are eager to return to normal but the safety of our associates and clients is our primary concern.”
Neiman Marcus Inc., which includes Bergdorf’s, also kept seven Neiman Marcus stores closed and was planning to close its Boston store at around 11 a.m. Monday. The East Coast distribution center in New Jersey was closed as well.
On Monday, Macy’s Inc. closed about 130 stores, including 14 Bloomingdale’s and three Bloomingdale’s outlets, mostly in the mid-Atlantic and Northeast. The New York offices for both Macy’s Inc. and Bloomingdale’s were also closed. “We got out ahead of it fairly early out of concern for the safety of our associates and customers. Decisions about the New York City offices and stores were made Sunday afternoon so people could get home before subways and trains were closed,” said Jim Sluzewski, Macy’s corporate spokesman.
Wal-Mart Stores Inc. said as of noon on Monday, 58 stores were closed. The breakdown: 14 stores in New Jersey were closed, 13 in Delaware, 29 in Connecticut, and one store each in Maryland and Pennsylvania. The company said about 800 of its stores fall along the Eastern seaboard in the projected path of the storm. Wal-Mart is trying to keep emergency supplies in stock and will remain open as long as it’s considered safe to do so, the retailer said.
In the week before Sandy, Target Corp. sent truckloads of essential products to stores and distribution centers within the storm’s path. “Now that the storm has begun, our focus is on the safety and well-being of our team members,” a spokeswoman said. “As of this morning, 14 Target stores are closed and we anticipate additional closures today and into Tuesday and Wednesday. In addition, we are working with our distribution centers and vendors to ensure that after the storm, essential items are replenished quickly.”
As of noon on Monday, there were 24 Sears and Kmart stores closed in Delaware, New Jersey and Long Island. “With the storm being 1,000 miles wide, we are closely monitoring road restrictions, flooding, and power outages,” a spokesman said. “We do have generators in the area that we can deploy to select stores in the event of power outages.”
Neal Black, ceo of Jos. A. Bank Clothiers, said the corporate office and warehouse in Hampstead, Md., were open Monday. However, 49 stores were closed, “all in a band between Washington, D.C., and Providence, with the center and the heaviest quantity of closings in New Jersey.”
He said none of the closed stores had sustained damage as of midday on Monday and “although hurricanes are more rare in the Northeast, we have a lot of stores in Florida and Texas so we have a pretty well-rehearsed and proven strategy for awning removal, board-ups and sand-bagging as well as manpower management,” he said.
“We have stores up and down the East Coast that are closed,” said Scott Birnbaum, senior vice president of marketing and e-commerce, although he didn’t yet have a count. All four units in New York City were closed on Monday, including locations in Times Square, on 34th Street, the Manhattan Mall and Fulton Street, Brooklyn.
The Bon-Ton Stores Inc. was “monitoring the storm” and would “make decisions on a one-on-one basis depending on conditions,” while Brooks Brothers said all New York City stores and the corporate offices closed early Sunday and remained shuttered Monday.
The Mall at Short Hills in Short Hills, N.J., Westwood Garden State Plaza, and Tice Corner Marketplace in Woodcliff Lake were among the Jersey malls closed Monday.
FASHION FIRMS REACT
Kellwood Co., Fifth & Pacific Cos. Inc., The Jones Group, Ralph Lauren, Calvin Klein, Donna Karan, Elie Tahari and Tommy Hilfiger were among the major fashion firms that kept their offices closed, along with many of the brand stores they operate. Theory, too, closed its stores and offices Monday, “and as of now, tomorrow [Tuesday],” said Andrew Rosen, ceo of Theory. Li & Fung closed its offices Monday as well as today.
“Given the potentially escalating weather conditions, further closures are being evaluated and appropriate actions will be taken as needed to ensure the safety and well-being of our associates and clients,” a Calvin Klein spokeswoman said.
Here’s how some fashion firms adjusted:
• An invite-only breakfast featuring a conversation with PPR ceo François-Henri Pinault, scheduled for Wednesday at the French Consulate, was postponed as Pinault canceled his trip to New York.
• Seize sur Vingt, the Manhattan-based label, offered a 30 percent online discount with the code “Sandy.”
• The Prabal Gurung for Target event, first set for Oct. 30, was postponed to Nov. 5.
• Coach had store closures throughout the Eastern seaboard, but gave no precise count.
• The Jones Group closed certain stores across brands including Nine West, Stuart Weitzman and Brian Atwood, said Scott Bowman, group president, global retail and international business development.
Net-a-porter, although it suspended its same-day delivery service in the New York City area, reported it did not experience a surge in e-commerce sales in affected areas. “Because of our geographically diverse customer base, we have not seen a dramatic impact to our sales at the moment,” said Net-a-porter managing director Alison Loehnis.
Accessories e-tailer Bauble Bar has seen increased traffic, engagement and an uptick in sales activity coming from the Northeast region since Sunday evening. Vice president of digital marketing at BaubleBar Shilpa Shenoy revealed that paired with a few planned promotions, she expects the next few days to bring in strong business digitally.
Safilo closed all its Solstice Sunglass boutiques in New York City, New Jersey, Connecticut and Long Island, representing more than 30 stores. The sunglass maker also had to cancel its Polaroid Eyewear 75th anniversary party at the Museum of Modern Art. Other social and industry events canceled because of the storm included the 2012 Annual Whitney Gala and Studio Party at Pier 57, and the “Anna Karenina” New York premiere at AMC Lincoln Center and after party at Monkey Bar.
Gemma Redux owner and designer Rachel Dooley said she and her team were working from their homes. “Since the MTA said subways won’t likely reopen until 12 hours after the storm clears, we are expecting to be closed until maybe Wednesday or Thursday,” she offered.
Tourneau closed all New York metro stores but saw no damage to any stores as of early Monday afternoon, said Larry Barkley, senior vice president of retail.
David Yurman confirmed that the company closed its stores on Sunday at 3 p.m. and they remained closed Monday. Jean-Michel Cazabat and Ash stores in New York City closed Sunday at 5 p.m. and will most likely be closed through Tuesday, said Josy Pintrand, director of retail for Ash NYC and Jean-Michel Cazabat NYC.
“Naturally it will have an effect in terms of volume, but our priority is the safety of our employees,” Pintrand said.
Monica Botkier, owner and designer of the handbag brand bearing her name, said her shipping facility, which is near a flood-prone area, and SoHo offices, were closed Monday and would most likely be closed Tuesday. She noted that because it’s the end of the month, any October holiday-resort shipments that have not gone out will be late. “We had more press appointments for spring ’13 scheduled for today and tomorrow, which are now canceled. Also our samples for summer ’13, which we are showing in November market next week, will be delayed. No fun.”
Executives at major innerwear companies including The Warnaco Group, Wacoal America, Komar Co., The Carole Hochman Design Group, Natori Co. and Richard Leeds International could not be reached Monday, though a spokeswoman for Maidenform Inc. said corporate offices in New York as well as facilities in New Jersey were closed. “We’ve been told the company will take every precaution. Pending the storm, the company will determine whether we will be closed for more days,” said the spokeswoman. Regarding the Nov. 5 to 9 market week, she said, “Not sure.”
Manhattan offices of beauty manufacturers closed Monday and stores switched gears. Instead of selling nail polish and fragrance, drugstores and discounters are trying to keep up with demand for water and batteries. On the more glamorous side, two marquee charity events — the Breast Cancer Research Foundation’s annual luncheon and scientific symposium, scheduled for today, and tonight’s Avon Foundation Awards Gala — have both been canceled. Kate Hudson had been scheduled to present an award at the BCRF luncheon.
On the retail front, Sephora said all of its Pennsylvania, New Jersey, Long Island and New York City freestanding stores were closed. Some upstate New York locations remained open as of Monday.
MAC Cosmetics said 125 of its locations have been affected.
Most of the major chains contacted Monday morning said they were keeping stores open, except in the case of mandated evacuations. The only Duane Reade store closings were in lower Manhattan’s Evacuation Zone A at press time, said Calvin Peter, spokesman for the chain.
CVS/Pharmacy, Walgreens and Rite Aid all said stores were open with the exception of mandatory closings. A Rite Aid store in the Princeton, N.J., area was open for business Monday morning, despite being battered by rain and wind. In the window, there was an impromptu sign proclaiming that last-minute supplies were in stock.
Manufacturers were forced to cancel events, too. Kiss Products delayed a press event to herald its new nail products in Manhattan until November.
The list of companies that closed their New York offices Monday, while telling employees to work from home, included the Estée Lauder Cos., Revlon, Avon Products Inc., the beauty division of LVMH Moët Hennessy Louis Vuitton, Clarins, Procter & Gamble and Shiseido, which decided to close for both Monday and Tuesday. At L’Oréal USA, employees were told to work from home and use their discretion in deciding if they needed to go into the office, a L’Oréal spokeswoman said. Revlon,Shiseido and P&G also closed their back offices in New Jersey, while Clarins closed its facility in Orangeburg, N.Y.
OBAMA BREAKS FROM CAMPAIGN AND ACTS ON STORM
In Washington, President Obama declared emergencies in New York, New Jersey, Massachusetts, Connecticut, Rhode Island, Delaware, Pennsylvania and Washington, while the Federal Emergency Management Agency said it could take weeks to determine the damage by Hurricane Sandy. President Obama, who returned to Washington from Florida on Monday morning, canceled his campaign appearances and gave a statement from the White House press briefing room.
“This is going to be a big storm. It’s going to be a difficult storm,” Obama said. “The great thing about America is when we go through tough times like this we all pull together. We look out for our friends, for our neighbors and we set aside whatever issues we may have otherwise to make sure we respond appropriately and with swiftness and that’s exactly what I anticipate is going to happen here.”
He said transportation will be tied up for a long time. “Probably the most significant impact for a lot of people in addition to flooding is going to be getting the power back on,” Obama said. “We anticipate there are going to be a lot of trees down, a lot of water. Despite the fact that power companies are working very closely with their various state and local officials to make sure they are bringing as many assets as possible and getting those ready for the storm, the fact is that a lot of these emergency crews are not going to be able to get into position to start restoring power until some of these winds have died down.”
The hurricane barreling up the Eastern seaboard did not stop the U.S. Supreme Court —the only nonemergency branch of the federal government that was open on Monday — from holding session. The High Court heard oral arguments in a copyright case that has significant implications in the debate over discounters and off-price retailers buying authentic products from middlemen abroad and selling them at lower prices in the U.S. versus a manufacturer’s right to control the distribution and resale of its copyrighted products.
The case, Supap Kirtsaeng vs. John Wiley & Sons Inc., involves a Thai mathematics doctoral student attending Cornell University who purchased textbooks produced in Thailand at reduced prices and resold them in the U.S. The publisher of the books, John Wiley & Sons, sued Kirtsaeng for violating the company’s copyrights and the lower courts ruled in favor of the publisher, ordering Kirstaeng to pay hundreds of thousands of dollars for the books he resold. It is considered by legal experts to be one of the most important business and consumer cases in the Court’s term and could affect companies such as Costco Inc. and Wal-Mart, as well as consumers reselling products on online marketplaces like eBay Inc.