Florida's major CE chains survived the ravages of four serious hurricanes in 44 days with their infrastructure largely intact. But their top and bottom lines will likely be bruised due to sales lost to the tropical storms.
Tweeter Home Entertainment Group, which operates some 30 Sound Advice stores throughout Florida, said its first concern was its employees, all of whom came through the hurricanes unharmed.
The stores themselves weren't as fortunate. Although none were significantly damaged, many sustained roof and water damage and lost exterior store signage and sign pylons. Some were still without water and power at press time.
All told, the company lost over 191 store days to weather-related closings. “We had a positive quarter going until the first hurricane hit Florida in August, and business could not regain its momentum,” reported CEO Jeff Stone. As a result, comparable store sales slipped 3.5 percent chain-wide for the three-month period ended Sept. 30, but would have declined only 1.8 percent minus the Florida stores.
“The No. 1 thing for us is the employees,” the Tweeter spokeswoman said. “We're glad they're all OK. They've been through a lot personally, and we're trying to keep their spirits up.” To that end, Tweeter's human resources department has been arranging shipments of food and ice to staffers' homes, and providing hotel rooms for those whose houses are uninhabitable. Tweeter has also been making charitable donations to local schools and communities, and, in one instance, provided a company truck for a post-Hurricane Charlie food drive organized by an employee in St. Petersburg. That staffer was forced to abandon the effort, however, when his own home was hit during Hurricane Frances.
The storms' full fury managed to miss BrandsMart USA, the six-unit CE, majaps and housewares discounter based here in southeast Florida, leaving only lost tiles, awnings and plastic coverings in their wake. But CEO/president Michael Perlman said the stores are built to take the worst. “We spent a lot on the buildings to protect them from storms. The wires are buried — you won't find any phone lines above ground.”
Nevertheless, there was no escaping the sales impact of power outages and store closures. “We were actually on track to beat last year's numbers through the third hurricane, but the last one brought us down a couple of points,” Perlman said. “Every couple of years we have shut down days, but this season we had more than our fair share. At least we don't have snowstorms.”
Although BrandsMart is certain to benefit from a brisk appliance replacement business, executive VP Larry Sinewitz said the company prefers regular majap cycles, which are broken by emergency buying. What's more, BrandsMart loses its low-price edge when consumers need to replace core appliances in a hurry. “After Andrew, people weren't concerned about price,” Perlman recalled.
To help out weather-beaten customers, BrandsMart, in cooperation with GE financial services, is extending its credit terms to 2006 and is providing some breathing room on bills. The company is also sending free appliances to families of employees in Jamaica, which was ravaged by the storms.
Circuit City, which has 43 stores in Florida, reported that many stores suffered a minor amount of damage with the Vero Beach location receiving the most. A company spokesman said the Vero Beach store was squarely hit by both Frances and Jeanne. There was some water damage and problems with the roof, but there was no extreme level of damage, he said. The other damage was described as light with the primary problems being damaged parking lots and dealing with fallen trees and light poles.
The Vero Beach store remains shuttered along with several others that still lack electricity.
Circuit City headquarters actively tracked down its employees in the impacted areas to ensure their safety and executives from the regional office went on an inspection tour of the affected areas.
Office Depot, which generates a disproportionate amount of revenue from areas hit by the hurricanes, and whose Delray Beach, Fla., headquarters was closed for at least four days, didn't fare as well. In a third-quarter sales and earnings outlook, released in mid-September prior to the arrival of Hurricane Ivan, the fourth storm, the company projected the weather-related impact on earnings at negative $0.01 to $0.02 per share.
Most facilities, other than those in the path of Hurricane Ivan, were operating at “basically normal levels” in mid-September, the company reported.