Blackout Not A Big Deal For Most Retailers
Aug 20, 2003 12:00 PM
The great blackout of 2003 may put a damper on the back-to-school season for some already-troubled teen stores, but the impact will be minimal for the majority of retailers, according to company executives and Wall Street analysts.
The blackout, which affected six states last week, including New York, New Jersey, Connecticut, Pennsylvania, Ohio and Michigan and the province of Ontario in Canada, caused most retailers to lose between 0.5 and 1.5 days of business, according to Banc of America Securities analyst Dana Cohen.
And the darkness couldn't have fallen at a worse time for many softlines retailers counting on a busy back-to-school shopping season to boost sales in the second half. According to Wedbush Morgan Securities analysts, August can represent more than 40 percent of third-quarter sales for some softlines retailers, particularly those with younger customers such as Abercrombie & Fitch and Charlotte Russe. For broadlines companies such as Target, Kohl's and Costco, August represents only about one-third of quarterly sales. For hardlines retailers such as Home Depot and Circuit City, the month represents approximately 28-33 percent of quarterly sales. Since August is only a four-week month on the retail calendar, even a few days of lost sales can have a disproportionate impact on monthly numbers and therefore quarterly profits.
In a report, Cohen said many retailers indicated that the ground lost on Thursday was regained over the weekend. At energy-guzzling Wal-Mart stores in Connecticut, Michigan, New Jersey, New York, Ohio and Pennsylvania, thermostats were raised to 76 degrees and only one-third of storewide lighting systems were used during the weekend to avoid straining regional electricity.
The retailers most affected were those with high concentrations of stores in the Northeast and Midwest, including AnnTaylor (21 percent of stores impacted), American Eagle Outfitters (23 percent of stores impacted), The Sports Authority (23.4 percent of stores impacted), J.Jill (21 percent of stores impacted), Kohl's (30 percent of stores impacted) and TJX Inc. (29 percent of stores impacted).
"We're most concerned about those retailers with exposure to the Canadian market," Wedbush Morgan's Adrienne Tennant said. U.S. retailers with a significant Canadian store base include American Eagle (with its Thrifty's/Bluenotes division), Gap Inc. and Gymboree, she adds, noting that 50 percent of TJX's 151 Canadian stores are in Ontario.
All in all, consulting firm ShopperTrak Inc. estimates retailers lost $30 million in sales because of the blackout. That number seems small compared to the $422 million lost earlier in the year when snowstorms ravaged the East Coast during the important President's Day shopping weekend. In fact, ShopperTrak's National Retail Sales Estimate index recorded a 5.6 percent overall gain in retail sales for the week ending August 16.
Acceptable Use Policy blog comments powered by Disqus
