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Fashion Jobs
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Published
Sep 13, 2017
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Harvey, Irma to hit US apparel retailers more than restaurants

By
Reuters
Published
Sep 13, 2017

Industry-wide retail sales in August and September will fall in the wake of hurricanes Harvey and Irma, with apparel retailers such as Gap Inc expected to take a longer-term hit than restaurant operators including Starbucks Corp.


Workers begin the task of carting away the flood damaged contents and interiors of homes following the aftermath of tropical storm Harvey in Katy, Texas - Reuters


U.S. same-store sales at apparel chains are expected to rise just 0.1 percent in the third quarter ending October, compared with a 0.6 percent increase seen before the hurricanes, according to Thomson Reuters data.

The two high-intensity hurricanes, which made landfall in the U.S. over the past two weeks, have killed dozens and damaged thousands of homes in Texas and Florida.

As residents in these states begin to rebuild houses, home improvement chains including Home Depot Inc are well positioned to benefit.

But some retailers are not as fortunate.

Dunkin’ Donuts could lose some $17 million in sales if all its stores in the storm-ravaged states of Florida and Texas are shut for a week, according to Cowen & Co. That would amount to a little more than 10 percent of the chain’s quarterly U.S. sales.

Bojangles Inc, known for its Southern-styled recipes, could see a big drop in sales, according to Canaccord Genuity analyst Lynne Collier. More than 80 percent of the company’s restaurants are in the storm-hit areas.

In contrast, Starbucks, with about 3 percent store exposure to Texas and 5.6 percent to Florida, could lose about $35 million in sales per week if all stores in those states were closed, Cowen said. That is less than 1 percent of the company’s quarterly sales.

Overall, Hurricane Harvey had a muted 40 basis point negative impact on industry same-restaurant sales in August, according to data research firm MillerPulse.

Supply chains are expected to be disrupted across the board, which could lead to delays in delivery of holiday inventories for some retailers, Cowen & Co analyst Oliver Chen said.

The worst hit by the delays are likely to be apparel retailers such as Gap Inc and J. Jill.

“Retailers that sell items which customers need, such as food and water and home improvement items, are better positioned versus retailers that sell discretionary fashion,” Chen wrote in a note.

The hurricanes are expected to have a “modestly negative” impact on Wal-Mart and dollar stores including Dollar General as demand for food, batteries and water before and after the hurricanes offsets losses from store closures, Gordon Haskett analyst Charles Grom said.

Same-store sales at Home Depot and Lowe’s are expected to rise 3.5 percent to 4 percent in the second-half of the year, Morgan Stanley analyst Simeon Gutman said in a note.
 

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