August 26, 2011 / 3:34 PM / 6 years ago

Home Depot, Walmart, grocers get boost from Irene

<p>People shop for supplies to weather approaching Hurricane Irene at a Home Depot store in Freeport on Long Island, New York August 26, 2011.Mike Segar</p>

NEW YORK (Reuters) - Hurricane Irene sent East Coast shoppers into stores to stock up on essentials this week, instead of the clothes, notebooks and other supplies that retailers were counting on selling as children get ready to go back to school.

Chains such as Home Depot Inc (HD.N) and Wal-Mart Stores Inc (WMT.N) were doing brisk business on Friday, selling water, flashlights, batteries and other goods in states standing in Irene's potential track from the Carolinas to Massachusetts.

"Most probably, the biggest demand right now is for generators, obviously," said Suzanne Roche, manager of a Sears (SHLD.O) store in Wilmington, North Carolina. "We have got customers calling nonstop."

Irene is due to make its first U.S. landfall in North Carolina on Saturday. The storm, which battered Atlantic and Caribbean islands including the Bahamas and the Dominican Republic, is then expected to head to the densely populated Northeast.

Those who were not trying to squeeze in one last summer stay on the New Jersey shore or Long Island beaches may have been planning to go to shopping malls to buy clothes, shoes and other items for children who will soon head back to school. Now those plans will be on hold.

"Nobody is going to go to a mall to buy a pair of jeans," said Richard Hastings, consumer strategist at Global Hunter Securities.

The back-to-school shopping season is the second-largest spending time for U.S. shoppers, behind the winter holidays.

The storm may dent the upcoming index of August sales at stores open at least a year by 1.5 percentage points, Hastings said.

About two dozen retailers, including department stores and apparel chains, are due to report monthly same-store sales on September 1. Analysts were expecting a 4.8 percent rise for August, Thomson Reuters said on Friday.

The storm could hurt retailers like Saks Inc SKS.N and Tiffany & Co (TIF.N) if airports stay closed for too long or people cancel trips, said Morningstar analyst Paul Swinand. The hurricane hitting on a weekend worsens its impact, he added.

That pain may be compounded following New York Governor Andrew Cuomo's announcement that New York City's subways, buses and commuter lines, which serve 8 million riders a day, will shut down around noon on Saturday.

Chains such as Target Corp (TGT.N) planned to keep their stores open as long as it is safe for shoppers and workers, and to comply with any evacuation orders.

Walgreen Co WAG.N said it would keep many stores open 24 hours a day to meet demand for supplies. It was still deciding which stores may close because employees might not be able to get to work.

Retailers kept shoppers informed online.

Home Depot, Rite Aid Corp (RAD.N) and other chains posted details on their websites.

Whole Foods Market Inc (WFM.O), known for its array of organic and natural products, was communicating with customers through local stores' Facebook pages and other social media.

After rumors spread in West Hartford, Connecticut, that all local stores were out of water, employees of a Whole Foods there took pictures of all the water they had in the store and posted them on the Facebook page, a spokeswoman said.

POTENTIAL MARKDOWNS

If retailers have excess merchandise because they lose out on a weekend of the back-to-school shopping season, it "could lead to markdowns in September and October," said Keith Jelinek, a director of AlixPartners' global retail practice.

Hastings expects Home Depot to do well, as it has 35 percent more stores than Lowe's Cos Inc (LOW.N) in the affected region. He also expects Newell Rubbermaid Inc (NWL.N) to benefit from demand for storage containers.

Newell shares rose about 1 percent on Friday. Among battery makers, Energizer Holdings Inc (ENR.N) was up almost 2 percent, and Spectrum Brand Holdings (SPB.N) gained nearly 3 percent.

Drugstores and grocery stores should also see a sales lift.

"It helps the supermarkets most because people really stock up," said BB&T Capital Markets analyst Andrew Wolf, noting Supervalu Inc's (SVU.N) strength in Boston and Philadelphia, and Safeway Inc SWY.N and Ahold's AHLN.AS big presence in Washington.

Great Atlantic & Pacific Tea Co Inc GAPTQ.PK is stocking extra water, ice, bleach and other goods at its A&P, Waldbaum's and Pathmark chains.

WATER GOING QUICKLY

In particular, Irene could affect companies with a strong presence on the East Coast in terms of higher sales before the storm and potential closings once it hits.

BJ's Wholesale Club BJ.N said 96 of its 190 stores are in the storm's expected track. They are receiving extra deliveries of items such as batteries, flashlights, generators and groceries, and the Massachusetts-based company's buyers are working to get water delivered to those locations.

Wal-Mart, which has an emergency operations center in its Bentonville, Arkansas headquarters, is tracking how the storm may affect roughly 600 of its stores and distribution centers.

It has also offered its help to governments in states such as New York, where hurricanes are less common.

"This is obviously not something that they probably plan for on a regular basis," said Mark Cooper, Wal-Mart's new senior director of emergency management, "so we just want to make sure that they know we are available to assist."

Reporting by Dhanya Skariachan, Phil Wahba and Ernest Scheyder in New York; Jessica Wohl and Brad Dorfman in Chicago. Writing by Jessica Wohl. Editing by Robert MacMillan.

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