Hurricane Irene’s retail losers include department stores and apparel retailers

New York City -- While it may take some to fully assess the damage, the impact of Hurricane Irene on retail sales is likely to split among retail sectors: Home-improvement stores selling emergency preparation products and clean-up items are likely to benefit the most from the storm, while apparel retailers and department stores selling non-essential items are likely to take a hit.



Industry analysts noted that big-box stores, dollar stores, drug stores and supermarkets all experienced sales surges prior to Irene’s arrival as consumers shopped for water, batteries and other emergency supplies, with the biggest winners are likely to be home centers and hardware stores. In fact, pre-and-post storm sales may aid same-store sales at Home Depot and Lowe’s each by 1% point in the third quarter, said Stifel, Nicolaus & Co. analyst David Schick in a MarketWatch report.



However, department stores and apparel retailers on the East Coast saw sales drop as they were forced to close doors over what is traditionally a prime back-to-school shopping weekend. Irene may have reduced apparel retailers’ same-store sales by 0.5% or less for the month as consumers stayed home during the critical back-to-school shopping season, Jennifer Davis, an analyst at Lazard Capital Markets, noted in an e-mail, Bloomberg reported.



Along the East Coast, some major shopping malls, including Menlo Park Mall, Menlo Park, N.J., and stores remained close as of Tuesday due to a lack of power in the area. A CVS pharmacy in Garwood, N.J., another black-out area, was open for business with the help of a generator.



Richard Jaffe, retail analyst at Stifel Nicolaus, estimated that 25% of last week's sales volume was lost for the 21 department stores and clothing chains he follows, which include Kohl's Corp. and Gap, in an Associated Press report. That does not bode well for retailers since the last week of August accounts for 30% of the month's sales. Jaffe also said the storm could also hurt stores' profit margins for September because many retailers will be forced to discount more heavily to get people in stores.



The Home Depot shipped more than 1,000 truckloads of extra storm-related supplies, spokesman Stephen Holmes said in the Bloomberg report. Chainsaws, cleaning supplies and vacuums are now in demand as people shifted their focus from storm preparation to clean-up, Holmes said. Similarly, Lowe’s Cos. shipped more than 1,000 extra truckloads of flashlights, batteries and generators to East Coast stores, Bloomberg reported.



As of 9 a.m. Monday, Wal-Mart said it had no reports of significant damage to any of its nearly 600 facilities located along the East Coast. At peak, there were 297 stores and clubs that were closed due to the hurricane. As the storm has moved north, it has reopened 259 of those stores and clubs.



Irene’s total damage, including uninsured losses, could range from $5 billion to $7 billion, he said. That stands in contrast to Hurricane Katrina, which reportedly cost more than $70 billion in insured losses alone.



Since Hurricane Katrina, the Federal Emergency Management Agency (FEMA) has begun studying ways to work with the private sector, including national retailers, during emergencies. For an interesting look at how The Home Depot and Wal-Mart prepared for the storm, go to npr.org/2011/08/26/139941596/big-box-stores-hurricane-prep-starts-early?ps=cprs