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Hurricane Dorian Could Cost Retailers $1.5 Billion

Hurricane Dorian could weigh on retailers in the southeast by putting an end to the lingering boost from Labor Day weekend and back-to-school sales. Total consumer spending is expected to drop by as much as $1.5 billion even after accounting for gains among supermarkets and home improvement stores, Planalytics told CNBC.

The storm is expected to cut foot traffic at apparel stores by 25%, while visits to outlet centers could fall by as much as 32%, according to Planalytics. In contrast, stores like Lowe’s, Home Depot, Target and Walmart are expected to see an uptick in sales as shoppers stock up, and their next-day delivery services will become particularly appealing to customers who don’t want to face the rush.

However, these boosts may be at least partially offset by store closures being made in preparation for Hurricane Dorian. For instance, Publix is temporarily closing 115 stores, while Walmart plans to close 46.

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The retail hit doesn’t end with reduced customer traffic — port closures in the Carolinas could also weigh on peak season sales. Many holiday goods are shipped in late August and early September, which may cause a ripple effect that delays the start of holiday sales.

However, much of these declines may be made up during the recovery phase that follows the hurricane. Retailers are well-versed in dealing with the fallout from weather events, and will adjust their stock accordingly to help customers repairing any damage done.

Last year, Hurricane Florence was expected to cost retailers $700 million in lost sales, according to Planalytics. Despite the damage, the storm provided an estimated 0.6 percentage point sales boost for both Home Depot and Lowe’s in the second half of 2018.

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