Hurricane Harvey continued to wreak havoc across the Texas coast on Monday, with thousands of people stranded in Houston alone, scores of stores closed throughout the region and lost sales estimated at up to $1 billion.
Harvey, the category four storm that made landfall on Friday and is considered the strongest to hit the state in decades, continued to pound Houston with rain on Monday as a tropical storm. At least 10 people have been confirmed dead so far, and the death toll is expected to rise. The National Weather Service issued a flash flood emergency “for life-threatening catastrophic flooding,” predicting as much as 50 inches of rain in some places. Areas near Houston and Galveston have measured more than 30 inches of rain already, according to the National Hurricane Center.
The weather event is initially expected to exact a $1 billion economic toll in lost sales over the duration of an extended period. Evan Gold, executive vice president of global services at Planalytics, predicted that stores in Houston will be closed for at least another five to seven days.
Ike Boruchow, a retail analyst at Wells Fargo, said retail traffic declined 6.2 percent nationwide and dropped 7.1 percent in the South on Saturday, when Harvey made landfall. “While it’s too early to determine the magnitude of the damage, there will clearly be some level of disruption for the retailers with heavy exposure to the state. The companies in our coverage that are the most exposed to Texas are Boot Barn, with 22 percent of stores, Ross, 14 percent and Carter’s, 13 percent.”
Charlie O’Shea, Moody’s lead retail analyst, “With Sandy [in 2012], it was a hurricane and then it was over; it wasn’t 50 inches of rain on top of the hurricane. There are a lot of moving parts here. The short-term impact is really hard to gauge and long-term is even harder. Let’s just be clear: this is a disaster of epic proportions, and the human side of this is what most important.”
Delivering Good, formerly K.I.D.S./Fashion Delivers, is working with the fashion, home and children’s industry to secure donations of new merchandise for the adults, children and families impacted by Hurricane Harvey. The charity is taking donations of product as well as cash, which will help transport the merchandise to its partners on the ground who will distribute it to people in need over the next several weeks and months.
“We believe that there will be a large number of people displaced from the storm damage and the flooding that is expected to continue through this week,” said Allan Ellinger, chairman of Delivering Good. “We are asking the industry to provide us with new products, as they have in many disasters we have responded to in the past. Consumers can help us with financial donations to help defray the costs of shipping the donations to the affected areas.”
Donations of both product and money can be taken through links at its Hurricane Harvey web page at delivering-good.org/disaster-relief.
Delivering Good has secured warehousing to receive and stage the donations now. The most important merchandise that is needed includes apparel for men, women and children; underwear and socks for men, women and children, and towels, sheets, blankets, comforters, pillows, toothbrushes, washcloths and personal-care items.
Lisa Gurwitch, president and chief executive officer of Delivering Good, noted that initial donors who have supported these efforts so far include shoes by BOBS from Skechers, portable cribs from Delta Children and denim from Jade Marketing Group. “We are also working with AAFA and other trade organization to engage the industry in this humanitarian response,” she said.
Kendra Scott, a jewelry brand with headquarters in Austin, said it will donate 50 percent of all online sales on Tuesday to the American Red Cross for Hurricane Harvey relief. A banner on the home page announces effort. The company operates 16 brick and mortar stores in Texas, two of which are in Houston. “Kendra Scott is a company born in Texas, and its heart and roots will always be there,” the company said.
Houston, which occupies about 600 square miles, accounts for 4 percent of the U.S. population and 4 percent of the country’s gross domestic product.
“Shopping malls, department stores and specialty apparel chains will all see negative impacts to traffic and sales,” Gold said. “Retailers with a large percentage of their total store base in Harvey’s impacted areas include Dillard’s, Fred’s Stores, Stage Stores, Cato Corp., 99 Cent Only Stores and Hibbett Sports.”
Restaurants and apparel retail — anything that’s not need-based — will take a hit. While some of the lost business could come back, by the time it does, there will be margin issues to deal with.
The storm will have reverberations beyond Houston. Refineries in Texas account for about a quarter to 30 percent of U.S. gas production, supplying the Southeast and Northeast. “Gas futures were up Monday morning,” Gold said. “The refineries could be down for a week or two, which could cause gas prices to go up in most of the country. People will have less money in their pockets.”
Rockport was the hardest hit city, with Houston and Corpus Christi, the location of the eye of the storm, also seeing major damage.
Wal-Mart Stores Inc. on Monday said 92 locations in Texas remain closed, including Sam’s Clubs, Supercenters, Neighborhood Markets and distribution centers. “Due to Hurricane Harvey’s impact on the Gulf Coast, stores and clubs are closed for the safety of our customers and associates,” the company said.
Several units are in the process of reopening. “As you get into suburban areas, we have some stores up in Spring, College Station, Waco and Temple,” a spokesman said. “Inside the Houston beltway, stores are closed. With the rain still coming down, we can’t guess as to when they’ll reopen. It could be a long process with the weather.”
Critical back-to-school selling will be lost, but how much depends on when stores can operate again. “Most of the schools in Texas start the day after Labor Day,” he said.
Wal-Mart and the Wal-Mart Foundation pledged cash and product donations of $1 million to relief efforts led by the American Red Cross, Salvation Army and Convoy of Hope. More than 972 truckloads of water were shipped from distribution centers. “We’re working by the hour with the operations team in that region to make sure we get the right products to the right stores,” the spokesman said.
Hunt Hawkins, ceo of Stein Mart, said 11 of the retailer’s Texas stores have been closed since the storm began on Friday. “We believe our associates are safe, but until the waters start receding, we’ve asked our associates not to go back into the stores,” he said. “We have the limited availability to use digital systems to look into stores and see damage. Houston is not good.”
Stein Mart units in Corpus Christi and San Antonio have reopened, Hawkins said, adding, “This is a very unusual storm. It’s now heading off the coast, and it’s going to come back. There’s been 50 inches of rain. That’s a hell of a lot of rain. We have our own foundation that provides assistance. Having stores in South Florida along the Gulf Coast, we’ve had experience with this and have systems in place to help our associates.”
J.C. Penney on Monday reported about 22 stores closed in South Texas and Lake Charles, La., due to the storm and ongoing rain. “Three stores, in Corpus Christi, Victoria and Lake Jackson, all in Texas, are without power as of this morning,” a spokesman said. “Our 12 locations in the Houston area are closed and we’re monitoring other store locations that could be impacted. Once closed locations are inspected and deemed safe — and our associates can safely travel to work — we’ll reopen stores on a case-by-case basis.”
To assist with relief efforts, the J.C. Penney Co. Fund is issuing a $25,000 grant to the American Red Cross.
A Sears Holdings spokesman said, “Our first priority is the safety of our associates, members and customers who work and reside in the region impacted by Hurricane Harvey. Leading up to landfall, our stores and facilities followed the necessary hurricane precautions. As of Monday morning, we have temporarily closed 35 locations — Sears stores, Sears Auto Centers, Kmart stores and other facilities — in the region primarily due to flooded roads and thoroughfares that make access restricted. We’ll continue to actively monitor the region.”
“The Galleria is closed today [Monday] due to inclement weather,” a Simon Property Group spokeswoman said of the high-end Houston mall. “We’re monitoring the situation and will continue to evaluate conditions.” The shopping center, which is the largest in Texas, houses about 400 stores, including Neiman Marcus.
Neiman Marcus closed its store at the Galleria at 6 p.m. on Friday. Karen Katz, chairman and ceo of Neiman Marcus, said in a company-wide letter, “The news about the impact of Hurricane Harvey is devastating. Whether it’s the disastrous flooding in Houston or the destruction along the Texas coast, it’s a true catastrophe and we can only be saddened by the dire situation of so many. We’ve closed our stores in the Houston area, and we continue to monitor the situation as the flooding continues. We’re extremely concerned about our Neiman Marcus associates and their families.”
“In the wake of Hurricane Harvey, our Amazon Houston area facilities have temporarily closed operations and customers in the flood impacted areas should expect delays in receiving their Amazon orders until the floods subside,” an Amazon spokeswoman said. “We’re continuing to check in with employees to confirm their well-being and safety, and our facilities have been minimally impacted by the floods or storm. Our thoughts are with our southern Texas family today.”
Amazon fulfillment teams in northern and central Texas are fulfilling wish list donations purchased by customers and transporting the needed items to Red Cross distribution centers. In addition, Amazon and Whole Foods Market will match cash donations up to $1 million made to the American Red Cross Hurricane Harvey relief efforts via Amazon.com.
Macy’s is closely monitoring the situation by location. “The safety of our customers and associates are our top priority,” a spokeswoman said, noting that 11 stores in the state remain closed, including stores in Houston, a distribution center and Corpus Christi unit, remain closed. “We don’t have a damage assessment at this time nor do we have any news of injuries to associates. It’s impossible to estimate lost sales or business impact until we know the timing of reopenings.”
Macy’s donated $50,000 to the America Red Cross relief efforts and is launching a matching gift campaign for associate donations.
Target Corp. said it closed more than 30 stores over the weekend for the safety of its associates and guests. “We’ll reopen locations as quickly as possible when it’s safe to do so,” the company said. “As always, we evaluate our store locations and teams to strike the right balance of providing for the community and staying safe for our team members.
“Our distribution and supply chain teams are working quickly to replenish impacted stores,” the company said, noting that before the storm, it provided extra products such as batteries, flashlights, cleaning supplies and nonperishable food to stores. “Local road flooding and closures are impacting our ability to make some deliveries and in those cases, we’re holding products at our distribution facilities so that we can quickly push them out to stores when the roads clear.”
Target said it will donate $500,000 to aid in recovery efforts, distributed to organizations such as the American Red Cross, the Salvation Army and Team Rubicon.
TJX, which lists 19 stores in the Houston area on its web site, acknowledged stores are temporarily closed in the impacted regions, but would not say how many. “We won’t comment on numbers, sales or profits until our third-quarter earnings announcement on Nov. 14,” a spokeswoman said. “Our primary focus is our associates and concern for them. Our thoughts are with all of the people in the impacted regions.”
TJX, which supports the American Red Cross, is making an additional donation from the TJX Foundation to the organization’s disaster relief fund to assist victims of Hurricane Harvey.