Irene’s retail winners
Home Depot and Lowe’s may receive a 1% bump to their third-quarter results as a result of Hurricane Irene sales, according to an analysis provided by MarketWatch.
A variety of retail analysts weighed in on the question of whether Irene would help or hurt retail sales, given that many stores were forced to close when evacuation orders came. But the overall consensus was that before-and-after hurricane sales will benefit home improvement retailers, while negatively impacting department stores, specialty stores and any retailer relying on back-to-school sales.
Home Depot sent 500 trucks of merchandise to stores in the potentially affected areas, although some of its vendors were asked to ship items like plywood and waters directly to stores.
Lowe’s also shipped more than 500 truckloads to its stores in the hurricane zone, according to the report.
Both home improvement chains kept stores open extended hours. In the coastal parts of North Carolina and Virginia, some Home Depot locations were open 24 hours.
Analyst David Schick of Stifel, Nicolaus & Co. predicted that Irene-related sales would boost comp-store sales at both Home Depot and Lowe’s by one percentage point each in the third quarter. Because of differences in their regional store concentrations, while a more Northern landfall and impact would contribute more to Home Depot’s sales.
Citigroup analyst Deborah Weinswig said her data showed that, throughout the whole hurricane-affected region, Home Depot had the second highest exposure (after supermarket chain Supervalu) at 31%. Lowe’s stores had a 26% exposure.
Analyst Alan Rifkin of Barclays Capital said the positive impact on same-store sales for some companies can lag over a one-year period following a hurricane. This is especially true for home improvement retailers, Rifkin said, because sales are driven by pent-up demand and rebuilding efforts.