Hurricane Sandy Threatens November Retail Sales

Hurricane Sandy Threatens November Retail Sales as Stores Close
People stock up on supplies at a hardware store as Hurricane Sandy approaches in Long Beach, New York. Photographer: Mike Stobe/Getty Images

Hurricane Sandy is threatening to reduce sales of clothing and holiday gifts during one of the most important shopping months of the year, while benefiting supermarkets and home-improvement stores such as Home Depot Inc.

Sandy may cut November same-store sales by as much as 3 percent, according to Oliver Chen, an analyst at Citigroup Inc. in New York. Traffic may fall 40 percent in affected areas in November’s first week, which accounts for about 22 percent of the month’s sales, Chen said in a note.

Retailers shut locations along the East Coast today as Sandy barreled into the region. The storm may help discount and home-improvement stores as consumers stock up on supplies, while reducing purchases at specialty-apparel chains, he said. American Eagle Outfitters Inc., Limited Brands Inc. and Urban Outfitters Inc. are among the companies with the highest percentages of their stores affected by the storm, Chen said.

“We expect Hurricane Sandy’s impact on the East Coast to be mixed,” Deborah Weinswig, a Citigroup analyst, said in an e-mail. “The storm will disrupt last-minute Halloween sales and mall traffic but drive stock-up trips to the discounters.”

Retail is just one industry hit by the storm as restaurants, schools, office buildings and equity markets shut for the day and travel is restricted. Economic damages from the hurricane may total as much as $20 billion, including as much as $10 billion in insured losses, according to estimates from Eqecat Inc., a provider of catastrophe risk models.

Economic Effect

Sandy could shave 0.1 percentage point to 0.2 percentage point from the annualized rate of U.S. economic growth in the fourth quarter, said Mark Vitner, a senior economist at Wells Fargo & Co. in Charlotte, North Carolina. The economy expanded at a 2 percent pace in the third quarter.

While some retailers may see a boost in sales after the hurricane, “there’s a loss of activity that’s going to be hard to make up,” he said. “If you’re a restaurant and you’re closed today, people are not going to eat two lunches tomorrow.”

Home Depot has a command center of 300 to 350 employees in four rooms at its home office in Atlanta working to prepare stores and associates for the hurricane, Doug Spiron, the company’s storm captain and merchandising manager for its southern division, said yesterday.

“This one has got so may facets to it -- you’ve got wind, you’ve got rain, you’ve got snow, you’ve got the full moon, you’ve got the storm surge and yesterday we had a tsunami warning, for goodness sake,” Spiron said today by telephone. “Then there’s the impact of the sheer size of the storm. This one takes it to another whole level of preparation.”

Home Depot

Home Depot and Lowe’s Cos., the largest U.S. home-improvement retailers, have trucked hundreds of loads of generators, flashlights, plywood and chainsaws to stores in Hurricane Sandy’s path, according to Spiron and Terry Johnson, Lowe’s senior vice president for its North region.

Home Depot has closed 18 stores in areas where local governments have mandated closings, Spiron said. Lowe’s, based in Mooresville, North Carolina, said in an e-mailed statement it plans 73 closings.

Wal-Mart Stores Inc., the world’s biggest retailer, has identified about 900 stores and clubs that are in the projected path of the storm, Dianna Gee, a spokeswoman for the Bentonville, Arkansas-based company, said today in a phone interview. The company has closed 88 stores, according to its website.

Possible Shortages

Some locations may have temporary shortages of water and other key items, Gee said. Immediately replenishing supplies may become impossible if trucks are forced to stay put due to high winds or road closings, she said.

In stores along evacuation routes, Wal-Wart has filled shelves with can-openers, ready-to-eat packaged foods and air mattresses for people forced from their homes, Gee said.

The company’s staff meteorologists are keeping tabs on potential long-term impact to stores along the East Coast. Wal-Mart has back-up generators ready in areas that may need emergency power.

“As the storm intensifies, we anticipate more store closings,” Gee said. “We hope that they are temporary.”

Hurricane Sandy is predicted to make landfall late today in southern New Jersey, then turn inland, according to an advisory from the National Hurricane Center in Miami. Winds may cause a tidal surge as high as a record 11 feet (3 meters), according to New York City Mayor Michael Bloomberg.

Sustained Winds

Sandy packed maximum sustained winds of 85 miles (140 kilometers) per hour, up from 75 mph earlier, the center said at 5 a.m. New York time. The storm’s eye was about 285 miles east of Cape Hatteras, North Carolina, and about 385 miles south-southeast of New York, moving north at 15 mph. It is not expected to weaken before landfall, the center said.

Target Corp. closed 14 stores in New York, New Jersey and Delaware, Jessica Deede, a Target spokeswoman, said in an e-mail. An additional 16 stores in Virginia will close this afternoon, Deede said.

Supervalu Inc. has closed 11 of its Acme stores in New Jersey and one in Maryland, Mike Siemienas, a company spokesman, said in an interview. The company also has closed some Save-A-Lot stores in New Jersey, he said.

“Our goal is to open our stores as quickly as possible,” he said. “We know that customers will need products.”

Grocery Closings

Other Supervalu chains that may be affected include Farm Fresh, Shoppers and Shaw’s, he said.

Kroger Co., the largest U.S. grocery-store chain, has been stocking its mid-Atlantic locations with extra bread, milk, and bottled water, Keith Dailey, a spokesman for the Cincinnati-based company, said in an interview. The stores also are increasing inventories of batteries, flashlights and ice, he said.

“We’ve been preparing for well over a week,” he said. Some locations in Virginia Beach, Virginia, are selling plywood, sandbags and consumer generators, he said.

Kroger stores and warehouses in the Midwest are getting ready for high winds and possible power outages with generators and refrigerated trucks, he said. There were no Kroger stores closed as of this morning, Dailey said.

Cabin Fever

Deborah Chusid, a 50-year-old art director who lives in the Upper West Side of Manhattan, was out at the Petco pet-supply store this morning to pick up some dog food and delay the onset of cabin fever.

“I know it’s going to get worse,” she said.

Chusid took care of her emergency grocery shopping yesterday and will be temporarily housing her son, a freshman at the City University of New York’s Macaulay Honors College who was evacuated from his dorm near the East River.

About 130 Macy’s and Bloomingdale’s stores will be closed today, as well as the Macy’s unit’s New York offices, said Jim Sluzewski, a spokesman. Cincinnati-based Macy’s Inc. has more than 800 stores in the U.S.

Saks Inc., the New York-based luxury chain, closed 10 stores from the Washington area to Boston, including the Manhattan flagship, which it boarded up at 4 p.m. yesterday, said Julia Bentley, a spokeswoman.

Macy’s has about 30 percent of its stores exposed to the hurricane, and Saks has about 27 percent, according to Bloomberg Industries. The two retailers reported a 150 basis-point loss to August sales last year because of Hurricane Irene, according to Bloomberg Industries.

Best Buy Co. closed about 179 stores along the East Coast, Amy von Walter, a spokeswoman, said in an e-mail.

Limited Brands

Limited Brands, which owns the Victoria’s Secret and Bath & Body Works chains, has about 160 stores closed today, Tammy Roberts Myers, a spokeswoman, said in an e-mail. The Columbus, Ohio-based company is watching the impact of the storm to determine future plans, she wrote. Limited Brands had 2,883 stores as of Sept. 29.

American Eagle has 64 stores closed today and shut its Manhattan locations at 5 p.m. yesterday for the safety of employees, Iris Yen, a spokeswoman for the Pittsburgh-based company said in an e-mail. American Eagle had 1,063 locations as of July 28.

Starbucks will have almost 1,000 stores closed along the East Coast from Virginia to Maine as of 4 p.m., Haley Drage, a spokeswoman for Seattle-based Starbucks Corp., said in an interview.

Dunkin’ Closings

Dunkin’ Brands Group Inc., owner of the Dunkin’ Donuts coffee-shop brand, has closed about 100 stores in the Northeast, Michelle King, a spokeswoman for the Canton, Massachusetts-based company, said in an e-mail.

PepsiCo Inc., the world’s largest snack-food maker, told the 1,300 employees at its headquarters in Purchase, New York, to stay home today and took its delivery trucks off the road ahead of Sandy’s arrival, Aurora Gonzalez, a spokeswoman, said in an interview.

The company’s distribution centers and plants in the area ran overtime on the weekend to meet increased demand as stores stocked up on Pepsi, Frito-Lay and Quaker Oats products, she said.

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