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Bloomberg's Shah on Hurricane Matthew Impact to Retail (Audio) · Bloomberg Intelligence

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  Speaker 1: You're listening to stock on Bloomberg Radio. More than twenty
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  Speaker 1: hundred flights have been canceled between today and Friday this
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  Speaker 1: as of the year early morning. This all according to
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  Speaker 1: flight aware dot com. This includes more than flights today
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  Speaker 1: in twelve hundred tomorrow. This because of Hurricane Matthew bearing
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  Speaker 1: down on the southeastern United States. Also many closures of stores,
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  Speaker 1: government offices, tourist attractions all being closed because of the hurricane.
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  Speaker 1: Here to tell us more about the effect of such
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  Speaker 1: a natural disaster on consumers and consumers spending and local
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  Speaker 1: economies is Sema Shaw are consumer consumer discretionary analysts for
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  Speaker 1: Bloomberg Intelligence. Seema, thank you very much for coming in,
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  Speaker 1: and of course, it is a very serious and dangerous
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  Speaker 1: situation currently taking place, not only in Florida and the
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  Speaker 1: coastal regions of the It States Eastern seaboard, but also
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  Speaker 1: the we noted the Bahamas and also Haiti was devastating
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  Speaker 1: lee target hit by the hurricane. Tell us your thoughts
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  Speaker 1: on on what this is doing right now to the
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  Speaker 1: economies um for retailers specifically, it depends on really what
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  Speaker 1: category and discretionary you are and how you'll be affected.
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  Speaker 1: So The beneficiary is, if there is anyone, would be
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  Speaker 1: the home centers, the home depots or lows. Prior to
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  Speaker 1: a storm, people tend to stock up on generators, im
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  Speaker 1: plywood to prepare their homes than themselves for the upcoming storm.
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  Speaker 1: Another beneficiary maybe the grocers as people stock up on
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  Speaker 1: necessities and consumables after the storm. Depending on the extent
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  Speaker 1: of the damage, there could be a benefit to home
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  Speaker 1: depot and lows into Q four and even into two
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  Speaker 1: thousand seventeen, which is sort of what they saw after Sandy.
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  Speaker 1: They saw a boost to Q four comps and then
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  Speaker 1: again in the first half of two thousand thirteen. At
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  Speaker 1: that time they saw a boost to sales as people
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  Speaker 1: continued to rebuild um But the storm is hitting. It
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  Speaker 1: looks like it's expected to hit on over the weekend,
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  Speaker 1: which will hurt likely hurt discretionary retailer. So those selling
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  Speaker 1: things that maybe you were just doing for fun, mall
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  Speaker 1: based retailer's department stores someone like a G n C
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  Speaker 1: or an altar, you know, specialty apparel, because you probably
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  Speaker 1: would stay home. So when analysts look at the numbers,
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  Speaker 1: will they just automatically discount of home depot sales, for examples,
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  Speaker 1: suddenly look really great. Will they say, well, but you
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  Speaker 1: know the the hurricane, people bought stuff before and after
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  Speaker 1: if somebody's sales are suddenly down, will they be very
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  Speaker 1: quick to say, oh, you know, we have a lot
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  Speaker 1: of stores in the path of the hurricane, and soone
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  Speaker 1: discounts it right. Well, Usually what will happen is during
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  Speaker 1: the conference call, the companies will either break it out
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  Speaker 1: and say that they estimate X number of basis points
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  Speaker 1: benefit or compression from the event, and analysts usually back
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  Speaker 1: it out or just for it and the next year
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  Speaker 1: when they look at comparables, just to make it a
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  Speaker 1: like for like basis. And just to note that both
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  Speaker 1: Lows and Home Depot have activated what they described as
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  Speaker 1: their hurricane center, right, and that's to activate their supply
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  Speaker 1: chains and to get necessary items down their batteries, flashlights,
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  Speaker 1: other things that people might need in a disaster, so
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  Speaker 1: they have greater supply and their stores. Both companies, all
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  Speaker 1: their stores are have backup generators, so they will stay
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  Speaker 1: in the store and remain open as long as it's say,
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  Speaker 1: for their employees and if they're restocking or getting any
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  Speaker 1: kind of shipments. Presumably this is that part of it, well,
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  Speaker 1: it is fairly short lived. In other words, if FedEx
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  Speaker 1: can't fly stuff around for them, they have a distribution center,
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  Speaker 1: so they'll probably already will prepare. There's a lot of
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  Speaker 1: this stuff is in stock for them for the most part,
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  Speaker 1: and I'm sure in the days prior when they saw
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  Speaker 1: I was coming. So I will just mention that the
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  Speaker 1: home depot in South Dixie Highway in Miami is already closed,
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  Speaker 1: so they may have rolling closures of a lot of
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  Speaker 1: these right, depending on things. Well, of course, it seems
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  Speaker 1: like the uh state of Florida has been very I mean,
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  Speaker 1: the President was warning people. Everyone's saying, take this seriously.
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  Speaker 1: Uh yeah, And I think that's probably a result of
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  Speaker 1: what's happened in prior disasters. Repeat will stay and then
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  Speaker 1: you have the first responders who end up putting themselves
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  Speaker 1: in danger. So I think this is just you know,
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  Speaker 1: it's better safe to be sorry and better to be prepared.
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  Speaker 1: So retailers that can help customers are going to try.
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  Speaker 1: And the other one, I mean, maybe they'll get a
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  Speaker 1: little bit of a hit, but as long as there's
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  Speaker 1: no permanent damage to their structures, they're probably be okay. Well,
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  Speaker 1: we of course we are thoughts with everybody in Florida
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  Speaker 1: and hope it maybe decides to go back east out
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  Speaker 1: to see Sema Sea. Thank you so very much. Consumer
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  Speaker 1: discretion analysts for Bloomberg Intelligence breaking down how the hurricane
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  Speaker 1: could have thanked the big real retailers along the East
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  Speaker 1: Coast