WEBVTT - Bloomberg's Shah on Hurricane Matthew Impact to Retail (Audio)

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<v Speaker 1>You're listening to stock on Bloomberg Radio. More than twenty

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<v Speaker 1>hundred flights have been canceled between today and Friday this

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<v Speaker 1>as of the year early morning. This all according to

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<v Speaker 1>flight aware dot com. This includes more than flights today

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<v Speaker 1>in twelve hundred tomorrow. This because of Hurricane Matthew bearing

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<v Speaker 1>down on the southeastern United States. Also many closures of stores,

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<v Speaker 1>government offices, tourist attractions all being closed because of the hurricane.

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<v Speaker 1>Here to tell us more about the effect of such

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<v Speaker 1>a natural disaster on consumers and consumers spending and local

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<v Speaker 1>economies is Sema Shaw are consumer consumer discretionary analysts for

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<v Speaker 1>Bloomberg Intelligence. Seema, thank you very much for coming in,

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<v Speaker 1>and of course, it is a very serious and dangerous

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<v Speaker 1>situation currently taking place, not only in Florida and the

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<v Speaker 1>coastal regions of the It States Eastern seaboard, but also

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<v Speaker 1>the we noted the Bahamas and also Haiti was devastating

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<v Speaker 1>lee target hit by the hurricane. Tell us your thoughts

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<v Speaker 1>on on what this is doing right now to the

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<v Speaker 1>economies um for retailers specifically, it depends on really what

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<v Speaker 1>category and discretionary you are and how you'll be affected.

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<v Speaker 1>So The beneficiary is, if there is anyone, would be

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<v Speaker 1>the home centers, the home depots or lows. Prior to

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<v Speaker 1>a storm, people tend to stock up on generators, im

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<v Speaker 1>plywood to prepare their homes than themselves for the upcoming storm.

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<v Speaker 1>Another beneficiary maybe the grocers as people stock up on

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<v Speaker 1>necessities and consumables after the storm. Depending on the extent

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<v Speaker 1>of the damage, there could be a benefit to home

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<v Speaker 1>depot and lows into Q four and even into two

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<v Speaker 1>thousand seventeen, which is sort of what they saw after Sandy.

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<v Speaker 1>They saw a boost to Q four comps and then

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<v Speaker 1>again in the first half of two thousand thirteen. At

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<v Speaker 1>that time they saw a boost to sales as people

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<v Speaker 1>continued to rebuild um But the storm is hitting. It

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<v Speaker 1>looks like it's expected to hit on over the weekend,

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<v Speaker 1>which will hurt likely hurt discretionary retailer. So those selling

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<v Speaker 1>things that maybe you were just doing for fun, mall

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<v Speaker 1>based retailer's department stores someone like a G n C

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<v Speaker 1>or an altar, you know, specialty apparel, because you probably

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<v Speaker 1>would stay home. So when analysts look at the numbers,

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<v Speaker 1>will they just automatically discount of home depot sales, for examples,

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<v Speaker 1>suddenly look really great. Will they say, well, but you

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<v Speaker 1>know the the hurricane, people bought stuff before and after

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<v Speaker 1>if somebody's sales are suddenly down, will they be very

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<v Speaker 1>quick to say, oh, you know, we have a lot

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<v Speaker 1>of stores in the path of the hurricane, and soone

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<v Speaker 1>discounts it right. Well, Usually what will happen is during

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<v Speaker 1>the conference call, the companies will either break it out

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<v Speaker 1>and say that they estimate X number of basis points

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<v Speaker 1>benefit or compression from the event, and analysts usually back

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<v Speaker 1>it out or just for it and the next year

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<v Speaker 1>when they look at comparables, just to make it a

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<v Speaker 1>like for like basis. And just to note that both

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<v Speaker 1>Lows and Home Depot have activated what they described as

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<v Speaker 1>their hurricane center, right, and that's to activate their supply

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<v Speaker 1>chains and to get necessary items down their batteries, flashlights,

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<v Speaker 1>other things that people might need in a disaster, so

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<v Speaker 1>they have greater supply and their stores. Both companies, all

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<v Speaker 1>their stores are have backup generators, so they will stay

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<v Speaker 1>in the store and remain open as long as it's say,

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<v Speaker 1>for their employees and if they're restocking or getting any

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<v Speaker 1>kind of shipments. Presumably this is that part of it, well,

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<v Speaker 1>it is fairly short lived. In other words, if FedEx

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<v Speaker 1>can't fly stuff around for them, they have a distribution center,

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<v Speaker 1>so they'll probably already will prepare. There's a lot of

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<v Speaker 1>this stuff is in stock for them for the most part,

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<v Speaker 1>and I'm sure in the days prior when they saw

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<v Speaker 1>I was coming. So I will just mention that the

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<v Speaker 1>home depot in South Dixie Highway in Miami is already closed,

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<v Speaker 1>so they may have rolling closures of a lot of

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<v Speaker 1>these right, depending on things. Well, of course, it seems

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<v Speaker 1>like the uh state of Florida has been very I mean,

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<v Speaker 1>the President was warning people. Everyone's saying, take this seriously.

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<v Speaker 1>Uh yeah, And I think that's probably a result of

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<v Speaker 1>what's happened in prior disasters. Repeat will stay and then

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<v Speaker 1>you have the first responders who end up putting themselves

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<v Speaker 1>in danger. So I think this is just you know,

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<v Speaker 1>it's better safe to be sorry and better to be prepared.

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<v Speaker 1>So retailers that can help customers are going to try.

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<v Speaker 1>And the other one, I mean, maybe they'll get a

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<v Speaker 1>little bit of a hit, but as long as there's

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<v Speaker 1>no permanent damage to their structures, they're probably be okay. Well,

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<v Speaker 1>we of course we are thoughts with everybody in Florida

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<v Speaker 1>and hope it maybe decides to go back east out

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<v Speaker 1>to see Sema Sea. Thank you so very much. Consumer

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<v Speaker 1>discretion analysts for Bloomberg Intelligence breaking down how the hurricane

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<v Speaker 1>could have thanked the big real retailers along the East

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<v Speaker 1>Coast