Superstorm Sandy Wrecks Havoc on Retail, Too

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Sandbagged subway stop in Manhattan as the city braces for the effects of Hurricane Sandy.

New York—Two days prior to Halloween the superstorm known as Sandy is bearing down on New York, New Jersey, Delaware and Pennsylvania causing businesses in major cities to remain closed, turning Manhattan and other metropolitan areas in its path into virtual ghost towns.

Closing along with restaurants, schools, office buildings and stock exchanges are major retailers including Macy’s, Bloomingdale’s, Gap, Uniqlo, JCPenney etc.—virtually every retailer in Manhattan and the metropolitan area. While the storm has yet to make landfall as of press time, the extent of the storm’s water surge, wind, rain etc. are unknown, leaving most retailers to have to shut down until further notice, resulting in days of lost sales.

Macy’s Inc. reported that 130 Macy’s and Bloomingdale’s stores are closed along with its New York City offices.

Knowing the storm would hit hardest later in the day, spokesman Jim Sluzewski said Macy’s Inc. “is continuing to monitor the situation store by store.”

Walmart closed 33 stores as of noon Eastern Time, primarily in Delaware, Maryland, Connecticut, and New Jersey.

The retailer had sent 282 truckloads of merchandise to stores in Sandy’s path ahead of the storm and was already moving merchandise to distribution centers close to affected areas for when the storm is over, said spokeswoman Dianna Gee.

Stores Blame Sandy to Lackluster Sales?

Target Corp. reported 12 stores closed as of this morning with additional closings anticipated for the rest of the day and into Tuesday and Wednesday, said spokeswoman Molly Snyder.

While the damage Sandy may cause could be amount to $20 billion—larger than the cost of Hurricane Irene in 2011—speculation is rife about what impact the superstorm may have on retail.

According to Oliver Chen, retail analyst at Citigroup Inc., November comparable store sales could be reduced as much as 3%.

Shopper traffic may fall 40% in affected areas in November’s first week, which accounts for about 22% of the month’s sales, Chen said in a note.

Moreover, while the storm may actually help sales at discount and home improvement retailers, it could have a detrimental affect in specialty apparel chains, such as American Eagle Outfitters, Limited Brands and Urban Outfitters, he added.

“We expect Hurricane Sandy’s impact on the East Coast to be mixed,” Deborah Weinswig, a Citigroup analyst, said in an e-mail. “The storm will disrupt last-minute Halloween sales and mall traffic but drive stock-up trips to the discounters.”

Storms, however, do come in handy when retailers are looking to point blame outside of the retail box. After Hurricane Irene hit the Eastern United States in August last year, Gap Inc., JCPenney and TJX Companies were among the retailers that pointed a finger as their August same-store sales came in light last year.