Hurricanes Harvey & Irma Affect U.S. Apparel Retailers More Than Restaurants

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In August and September, industry-wide retail sales will decline after the impact of hurricanes Harvey and Irma, with apparel retailers like, Gap Inc. (GPS.N) predict to take a longer-term hit than restaurant operators such as Starbucks Corp (SBUX.O).

U.S. same-store sales at apparel chains are anticipated to increase 0.1 percent in the third quarter ending October, in comparison with a 0.6 percent increase seen prior to the hurricanes, according to data.

The two high-intensity hurricanes, which made landfall in the U.S. over the past two weeks, have killed dozens and injured thousands of homes in Texas and Florida. As residents in these states start to rebuild houses, home improvement chains including Home Depot Inc (HD.N) are well poised to capitalize.

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 reported. That is less than 1 percent of the company’s quarterly sales.

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

Supply chains are projected to be interrupted widely, which could result to delays in delivery of holiday inventories for some retailers, Cowen & Co analyst Oliver Chen reported.


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“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 stated.

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

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