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No Break From Harvey’s Deluge for Texas or Louisiana

Women’s Wear Daily

By: Sharon Edelson with contributions from Lisa Lockwood, Vicki M. young

As Tropical Storm Harvey continued to drench the northern coast of Texas on Tuesday, observers said the storm will have a significant short-term impact on retail in the region but business will then pick up in the longer term.

The hurricane has dumped record levels of rainfall on the area over the last six days. Several more days of heavy rain are expected as the center of the tropical storm briefly leave the coast, then tracks back on Wednesday, with the heaviest downpours east of Houston and southwest and central Louisiana. The storm has killed 19 people in Texas so far.

While Harvey’s cost to retailers in lost sales will be at least $1 billion, it could take $8 billion out of the state’s economy. Houston accounts for 4 percent of the U.S. population and 4 percent of the country’s gross national product. Gas prices could rise at the pump due to a decline in capacity at Texas oil refineries, which account for about a quarter of U.S. gas production.

“We believe there will be a short-term shortfall of $2 billion to $4 billion in the Gulf Coast area, but the shortfall will reverse direction by mid-September when deferred demand will be unleashed and repair and reconstruction will be well under way,” said Craig R. Johnson, president of Customer Growth Partners. “Overall, Texas and Louisiana sales will be up year-over-year for the third quarter as a whole. The national impact on retailers will be quite limited.”

Since schools start early in Texas, most back-to-school shopping has been completed, but sales of sweaters and outerwear, which usually takes place over the Labor Day Weekend and into September, will be delayed for some time, occurring later than usual in the third quarter, Johnson said.

“Key losers will include many mall-centric stores suffering from sluggish traffic well before Harvey,” Johnson added. “The mall stores with strong online operations should be able to make up most of the shortfall in the coming weeks.”

The news isn’t all bad. Wal-Mart Stores Inc. on Tuesday morning said it reopened about 14 units, mainly in eastern Houston. Later in the day, the number swelled to 100 Wal-Mart stores, Supercenters, Neighborhood Markets and Sam’s Clubs listed as reopened. “We’re getting up and running,” a spokesman said. “We continue to determine which stores have power and which are less flooded. The flood waters could continue to rise, so we’re keeping an eye on it as the storm moves to Louisiana. As the rain hunkers down there, we’ll see what happens.”

Evan Gold, executive vice president of global services at Planalytics, said Harvey “is an evolving situation. Even when the rain stops in Houston on Wednesday or Thursday, the infrastructure will need time to get back to normal, so any store that opens will sell need-based purchases. Louisiana is at risk from heavy rain. It won’t be near what Houston experienced with Harvey basically stalled there for several days.”

Retailers with more than 20 percent of their store base in the path of Harvey include Fred’s Stores, Shoe Carnival, Cato Stores and Stein Mart, Gold said. Stage Stores, which operates 231 units in Texas, said, “At this time, our focus is on supporting our associates and communities that were affected by the storm.”

Of 22 J.C. Penney stores closed due to Harvey in South Texas and Lake Charles, La., five Texas stores were set to reopen with limited hours on Tuesday afternoon. Two units in Corpus Christi and Victoria, Texas, remained without power. “We’re monitoring stores in southwest Louisiana for potential heavy rainfall,” a spokesman said.

Saks Fifth Avenue’s Houston store and three Saks Off 5th units remain closed. A spokeswoman for HBC said, they’ll reopened once conditions are deemed safe.

As retailers continued to process the extent of Harvey’s damage, further relief effort donations were revealed.

A donation through the CFDA Foundation has been made to the American Red Cross and Houston Mayor Sylvester Turner’s Hurricane Harvey Relief Fund. A post on CFDA.com lists how the industry can help, including making donations to Delivering Good, All Hands, Global Giving, Houston Coalition for the Homeless, Feeding Texas and Portlight.

Steven Kolb, chief executive officer of the CFDA, sent an e-mail to its 500-plus members Tuesday morning about the group’s efforts and ways to help those in need.

Kohl’s on Tuesday said it’s making a $500,000 cash donation to the American Red Cross for hurricane relief and recovery efforts in Texas and across the Gulf Coast. Some of the retailer’s 18 stores in Houston and the surrounding area remain closed and Kohl’s is waiting and watching as more weather is expected.

Kohl’s is also giving $1 million of financial support to associates who’ve been significantly affected by the storm. “Hundreds of thousands of families have been displaced or impacted by Hurricane Harvey,” said Michelle Gass, chief merchandising and customer officer. “Kohl’s is grateful to be in the position to provide financial support and help associates as they recover.”

Nordstrom’s Houston-area stores remained closed on Tuesday when the retailer revealed a donation of $200,000 divided between the American Red Cross relief fund and local United Way.

The Polo Ralph Lauren Foundation said it will make a donation of $100,000 on behalf of its employees worldwide to the American Red Cross, and the foundation will also match employee contributions dollar-for-dollar, up to $1 million.

J. Jill Inc. is making a $50,000 donation from the J. Jill Compassion Fund to the American Red Cross, said ceo Paula Bennett, noting that the fund will also match associate donations of up to $50,000 to support relief efforts.

Jefferies retail analyst Randal Konik informed clients a global trading relief day on Wednesday will support Hurricane Harvey relief efforts, with all net trading commissions from U.S, European, Asia Equity, fixed income and foreign exchange trading donated to a series of charities. Jefferies will also donate $1 million directly to relief efforts, and let employees donate via direct payroll deduction.

Kendra Scott said on Tuesday that it will donate 50 percent of all online sales to the American Red Cross for Hurricane Harvey relief. “Kendra Scott is a company born in Texas, and its heart and roots will always be there,” the company said, noting that Scott operates 16 brick-and-mortar stores in Texas, two of which are in Houston.

Wal-Mart and the Wal-Mart Foundation pledged cash and product donations of at least $1 million to relief efforts, and the retailer said it’s transported 1,600 truckloads of supplies.

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