Retailers grapple with impacts of Hurricane Ike

Business Materials 15 September 2008 04:50 (UTC +04:00)

Retailers in the Houston area scrambled on Sunday to stock shelves and open stores forced to close, as they tried to meet high demand for emergency supplies in the wake of Hurricane Ike, reported Reuters.

Ike, which slammed into the Texas coast as a Category 2 hurricane on Saturday, flooded hundreds of miles of U.S. coastline, cut power to millions of people and pummeled the oil hub of Houston.

While the actual storm itself was not as bad as the worst fears had predicted, analysts said the economic damage could still be quite significant, aiding retailers who sell necessities and hurting those who are more discretionary.

Evan Gold, with weather tracking firm Planalytics, said the economic impact of the storm could be magnified since it rolled over the country's fourth most populous city and the heart of its oil industry.

"From an energy and a retail perspective, the impact is going to be much more significant than people thought," Gold said.

Many coastal areas remained vacated on Sunday, but in those open to traffic people flocked to grocery stores, home centers and discount chains to stock up on items used to survive, clean up and rebuild.

At a Home Depot (HD.N) in south Houston, several hundred people waited in the rain for the doors to open, so they could look for everything from roof shingles and chainsaws to batteries and generators.

"We need power, water, batteries and gas to move around. I'm here for a generator, as all our food is going to go to waste," said construction worker Alfonso Martinez. "We could wait a long time for power to come back."

The store was taking in supplies of batteries, water and gasoline containers through the cargo door and an employee said they were waiting on a shipment of generators to come in.

Home Depot spokesman Craig Fishel said the retailer had set up about 300 trucks near affected areas, in order to refresh empty shelves.

Wal-Mart Stores Inc (WMT.N) also saw increased demand for ice, bottled water, flashlights, batteries, tarps, ropes, duct tape, canned foods, gloves and other cleaning supplies, said spokeswoman Ashley Hardie.

Damage assessments have barely begun, but early estimates suggest the bill could rise to $18 billion.

Wal-Mart managed to reopen 15 stores in affected areas, but still has 137 stores closed in Texas, Louisiana, Missouri and Arkansas. Rival Target Corp (TGT.N) said it closed 40 stores due to evacuations, but that, as of Sunday morning, all but 12 were reopened. Target spokeswoman Amy Reilly said the company was planning to open four more on Sunday.

Planalytics' Gold said retailers such as Wal-Mart, Home Depot Inc, Lowe's Cos Inc (LOW.N), Family Dollar Stores Inc (FDO.N) and Dollar Tree Inc (DLTR.O), which have sizable presences in the storm's zone, could see an overall benefit to sales, as demand for supplies could offset lost sales from closed stores.

Fast food restaurants are other chains that stand to benefit, Gold said.

Burger King Holdings Inc (BKC.N) spokeswoman Amy Wagner said 149 Burger King restaurants were closed due to the storm, but six had reopened. She noted that restaurants in areas that welcome evacuees usually get a bump in business, along with restaurants that reopen after being closed, as consumers seek a change from the canned foods they end up eating elsewhere.

Like several others in a slow-moving line of people with shopping carts outside an HEB grocery store in south Houston, Dawn Martin told Reuters she was planning to barbecue on Sunday, since that was the only thing working.

As people focus on feeding their families and rebuilding their homes, they probably will probably not think about splurging on unnecessary items such as clothes, shoes or jewelry, Gold said.

That could spell bad news for retailers with a sizable presence in the storm's path, including Shoe Carnival Inc (SCVL.O), Stage Stores Inc (SSI.N), Kohl's Corp (KSS.N) and Macy's Inc (M.N), Gold said.

High-end department store Nordstrom Inc (JWN.N) only experienced a minimal impact, said spokeswoman Brooke White, who noted the company only closed one store, in the Houston Galleria.

Even though the mall reopened on Sunday, the Nordstrom remained closed as employees were having trouble getting to work, White said. The store will reopen on Monday.