Hurricane Irene Impact: Home Center Boom, Back-to-School Bust

The Hurricane Irene clean-up that's now under way is creating a mini-boom for mass merchants, home centers such as Home Depot and Lowe's and grocery/convenience stores, as consumers in one of the most densely populated areas of the country shop for generators, pumps, chainsaws and home restoration items along with mops, buckets, tarps and trash bags.

Irene, which peaked as a Category 3 hurricane and made its initial landfall on Saturday, August 27 as a Category 1 hurricane, traveled up the Eastern Seaboard from the Carolinas to New England, ultimately affecting 17 states and several Canadian cities, including Montreal and Halifax.

An estimated 80 million consumers were within 200 miles of the eye of the storm at some point during the past week, and the storm caused 4 million power outages, many of which are ongoing, according to the business weather intelligence firm Planalytics. In a statement, the company said that while measuring the storm's total economic impact will take some time, preliminary estimates put the damage total at $7 billion.

Some retailers began to see sales increases even before the storm hit their areas. "Given the relatively long lead time before Irene's arrival, consumers had ample opportunity to stock up and prepare," according to a Planalytics statement.

Retailers feeling the biggest negative effects, besides those with damage to their physical stores, will be department stores and specialty apparel chains. Irene's timing as much as its path is to blame here: consumers who were kept close to home over the weekend are likely to postpone back-to-school shopping until Labor Day weekend, which typically features heavy promotional activity. So retailers with a large presence in the Northeast that rely on back-to-school sales could see their margins clipped, according to published reports.

Quoting an e-mail from Jennifer Davis, an analyst at Lazard Capital Markets, a Bloomberg News report said the storm may have reduced apparel retailers' comparable store sales by 0.5% or less for the month of August.

While there are certainly retail winners and losers from Hurricane Irene, Planalytics stressed that "there are millions of dollars in economic activity and productivity that were lost and simply will not and can not be recouped."