Sandy could give Target a small sales bumpby Annie Baxter, Minnesota Public Radio
ST. PAUL, Minn. — Experts are predicting that Hurricane Sandy will hurt U.S. economic growth in the short term. But the long-term effects are not expected to be devastating. That appears to be true for some of the big Minnesota companies that have operations out East.
Hurricane Sandy forced the closure of about 200 Target stores in the path of the storm. Perishable food at many locations went bad due to loss of power. And, of course, there was the loss of sales from the store closings, which came at a bad time, the week of Halloween.
"Many stores were closed at one of our busiest selling times of year," said Amy Reilly, a Target spokeswoman.
Reilly said the situation is stabilizing and many stores have reopened. Though some areas on the Eastern Seaboard still have a lot of damage and road restrictions, Target's warehouses are functioning and products are flowing back into stores.
"Where we can get through easily we are sending trucks," said Reilly. "We're just watching the road conditions carefully and working with our carrier vendors to get product to the stores as quickly as we can."
Target will soon bounce back from the storm, according to Sean Naughton, an analyst with Piper Jaffray.
"I think it will be a benign impact on the company overall and most investors will overlook a one-time impact like a hurricane," he said.
Naughton said Target could even register a bump in sales from people restocking their food shelves, or replacing rugs or furniture that might've gotten ruined in a flooded basement.
The overall damage from the huge storm could reach $10 billion, according to preliminary estimates.
But Naughton said for Target, not so much.
"These things historically have not been a huge impact to the financial results for an extended period of time for a retailer the size of Target, given the fact that they have over 1,700 stores across the United States," he said.
For other Minnesota retailers like Supervalu and Best Buy, it's a similar story. The number of stores they had to shutter represented a small percentage of their total footprint.
About half the Best Buy stores that were closed Monday are now open again, according to company spokeswoman Amy Von Walter. Others will take longer due to flood-related damage to store buildings. That's the case at a store in New Jersey, one in Ohio, and another in New York.
"One store had a warehouse wall collapse. So we're looking at that damage and trying to figure out what we need to do in terms of repairs," Von Walter said, adding that no one was injured at any of the damaged buildings.
Of course, lots of businesses and individuals will be filing insurance claims due to damage from the storm. And that could mean that the insurance company Travelers will take a big hit.
The company is no longer based in Minnesota, but still employs a lot of Twin Citians. A Travelers spokesperson declined to comment on the potential financial impact it could suffer from Hurricane Sandy.
It's hard to know how much Travelers will have to pay out in claims, according to Drew Woodbury, an analyst with Morningstar. Since it's one of the nation's biggest insurers, Woodbury said Travelers' portion will likely be sizeable.
"But at the same time they're well capitalized, and the industry has had a pretty calm year so far," said Woodbury. "So they should be in a pretty good position to pay any claims that arise."
Woodbury said Sandy may leave Travelers with a loss for the fourth quarter. But from his perspective, that's unlikely to mean something like job cuts are in the offing.
Another big Minnesota employer, Delta Airlines, saw a major disruption in operations at two New York City airports because of the storm. Delta cancelled about 3,000 flights over several days.
The company told Bloomberg News that it hopes to resume some domestic flights at Kennedy airport on Wednesday, and limited service at Laguardia on Thursday.
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- All Things Considered, 10/30/2012, 5:24 p.m.