Believe it or not, with Sandy barreling down on the East Coast, consumers were spending their weekends shopping at the Home Depot (NYSE:HD) and Costco (NASDAQ:COST), and not American Eagle Outfitters (NYSE:AEO). Consumers seemed to prefer stocking up on food, batteries, and materials to repair possible damage to homes, instead of jeans and t-shirts. With the storm likely to last until Thursday, consumers are not expected to go back to discretionary retail stores until the end of the week.
Citigroup analyst Oliver Chen did some analysis, estimating the hit certain retailers would take because of the storm. For one, he defines the storm region as including the states: Connecticut, Delaware, Maryland, Massachusetts, Maine, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, South Carolina, Virginia, Vermont, and Washington, D.C.
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American Eagle Outfitters is among the retailers with the highest presence in the region, with some 32 percent of its stores there. Other retailers like Coach (NYSE:COH) and Ross Stores (NASDAQ:ROST) have a much lower presence, coming in at 12 percent and 15 percent respectively.
On average, the retail industry has about 24 percent of its stores in the area. Understandably, sales for the week are bound to be low. The significance, calculates Chen, is that a 2 to 3 percent decrease in November sales could lead to a 1 to 2 percent impact in the quarterly numbers.
Halloween-related sales are likely to suffer as well, as trick-or-treating is pretty much out of the question. Sales could decline as much as 40 percent for the first week of November, which typically accounts for about 22.4 percent of sales for the month. Chen estimates that losses will come between the 2 to 3 percent needed to make a notable dent in total quarterly numbers.
Other retailers like Home Depot and Costco are not expected to suffer as deeply. Home depot in particular is likely to enjoy strong November sales as customers repair any damage to their homes before winter sets in.