Citi On The Retail Sales Impact Of Hurricane Sandy

Tyler Durden's picture

Via Citi:

How Much is Hurricane Sandy Shoplifting Retail Sales?

Alert: 70mph Winds! & We Calculate Comp Headwind of ~(2)%

We’re Thinking About Specialty Retail Softlines & Luxury Shopping and Also Getting Ready for a Massive Frankenstorm — Hurricane Sandy is expected to make landfall Central/Southern NJ Monday PM & impact expected to range from Mid-Atlantic to Southern New England. Flooding/Damaging wind gusts expected New Jersey, NYC, Long Island, Delmarva, Philadelphia, Boston, Washington DC and could adversely impact 60mm people. Airports adversely impacted: Washington D.C., Philadelphia, New York, and Boston.

What’s the Retail Sales Impact? Expect a (2)-(3)% Hit to Sales in Retail Calendar’s November, Probably Slightly Less Bad Than Feared — Hurricane Sandy will negatively impact traffic and retail sales in the retail calendar’s November Week 1. Week 1 is historically ~22.4% of Nov’s sales and we estimate traffic could be down ~40% for the week in negatively impacted areas. We calculate that Sandy could negatively impact November monthly comps by (2)-(3)% based on 22% (Wk 1 mix of month) * -40% (Citi traffic/comp headwind assumption) * 24% mix (average mix of stores impacted). A negative impact of (2)-(3)% in November would yield a negative quarterly impact of ~(1)-(2)%.

Our Retailers Have 24% of Stores in Storm Region on Average: Most AEO with 32% and Least COH With 12%, — We calculate that our sector has 24% of stores on average in the negatively impacted area. Based on our calculations on a relative basis, we estimate the most significant impact likely at AEO (32% of stores impacted), URBN (29%), and LTD-VS (29%), and least impacted retailers rank as COH (12%) and ROST (14%). Other retailers impact: 25%. In general, we acknowledge that retailers have significant exposure to this region affected by the storm. Our analysis includes: CT, DC, DE, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, & VT as the impacted area.

 

No Need to Shop for a Dress or a Watch Right Now!We do expect -40% or greater impact for the week at discretionary apparel and accessory retailers given a combination of store closures and severely depressed traffic levels; on the other hand, retailers focused on consumer staples and home improvement are likely to have traffic surges as customers seek emergency supplies, food, and home repair items.

Traffic Decelerated Into the Weekend — Weekend mall traffic was weaker given Fri -2.2%, Sat -1.6% vs. 1H’s ~flat yielding October week 4 traffic of -0.65% (week 4 ending Saturday 10/27). Month of Oct traffic was -0.40% vs. Sept’s flat & Aug’s -1%.

 

Source: Citi