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Apparel Dealt Another Blow by Recent Hurricanes

With Hurricane Harvey and Irma recovery in full swing, Texas, Florida and other affected regions are left to assess the damage. And beyond personal loss, the destructive weather is likely to leave some retail sectors in tatters.

Irma‘s economic impact for retail was predicted to be $2.75 billion, while Harvey is estimated to have caused $1 billion in lost sales.

Overall, retail sales for August and September are expected to fall. Experts predict that apparel retailers will feel the impact from the hurricanes the longest. Predictions for the third quarter estimate same store sales will rise by 0.1% in this sector, compared to the 0.6% increase before the hurricanes, according to Thomson Reuters data.

On the other hand, chains that offer hammers and nails are expected to see an uptick, according to Reuters. It seems new clothes are low on the priority list when new roofs and windows are needed. Morgan Stanley said home improvement stores will see a 3.5 to 4 percent rise in the second half.

Further, stores that offer necessities like Walmart and dollar stores are not likely to see much of a decline, according to Gordon Haskett.

While restaurants are expected to recover more quickly than apparel, it will take longer for some. The timing will be largely dependent on how concentrated the chain is in the affected areas. For instance, Cowen & Co. expects Dunkin’ Donuts to lose $17 million in sales or 10 percent of its quarterly sales in the U.S. For Bojangles fast food restaurants, the news is worse. The company has more than 80 percent of its locations in the storm zones.

Oliver Chen of Cowen & Co. said the holidays could be made more challenging if supply chain disruption persists.

“Retailers that sell items which customers need, such as food and water and home improvement items, are better positioned versus retailers that sell discretionary fashion,” Chen wrote in a note.