COMPANIES, CONSUMERS TO FEEL STORMS’ IMPACT
Expect to see higher prices, less-crowded shelves and some hurting bottom lines when they’re over
Damage and disruptions resulting from Hurricane Harvey’s and Irma’s floods and winds could drive up prices for everything from vacations and plastic toys to oranges and cocoa.
It also could lead to pain in your 401(k). Publicly traded companies whose shares are in many retirement portfolios, including Comcast, Newell Brands and auto retailer Group 1 Automotive, are among those saying the storms will hurt business or financial results.
CONSUMER PRODUCTS
The Gulf Coast region, where Harvey hit, is home to thousands of oil and oil services companies, some supplying materials used to make the plastics and resins that go into a wide range of items from milk jugs to paint buckets to children’s toys to garbage bags. Newell, the owner of brands such as Rubbermaid and Sunbeam, said supplier shutdowns in Texas and Louisiana due to Harvey would lead to higher costs.
“Virtually every major plastic producer has been affected by Harvey,” said Nick Vafiadis, vice president of plastics at IHS Markit, a research consultancy firm.
Based on supply shortages, Vafiadis expects prices to manufacturers to rise as much as 20% and stay up through the end of 2017.
Communication providers may see a hit. Comcast, which provides cable and Internet services, said it could lose 100,000 to 150,000 video subscriptions.
TOURISM
Cruise cancellations may cost Carnival, the parent company of Princess Cruises and Holland America, 3 to 5 cents per share, Instinet analyst Harry Curtis told clients this week.
Two other major cruise companies, Royal Caribbean and Norwegian, could see a similar impact. The three major cruise lines have canceled or modified dozens of sailings out of Florida. Royal Caribbean and Norwegian didn’t immediately respond to requests for comment.
It could be a similar story for hotels and resorts. Most major chains, such as Hyatt and Hilton, allowed customers with plans to travel to the Irma-affected area to cancel their reservations with no financial penalties. This may result in a temporary decrease in revenue; how bad it will be will depend on the duration of the storm and the extent of damage.
RETAIL
Francesca’s, a Houston-based chain of nearly 700 boutiques selling clothing and other products, said it expected to have trouble getting merchandise in for a couple of weeks.
Auto retailer Group 1 Automotive, which has dealerships in Houston and Beaumont, Texas, said it had about $15 million in unplanned expenses associated with Harvey. And AutoNation, the largest dealership company in the USA, closed its 35 stores in Palm Beach, Fort Lauderdale, Fort Myers and Miami, spokesman Marc Cannon said. Workers moved thousands of cars to storage facilities, higher ground and shopping malls.
FOOD
If Irma hits Florida hard, the cost of oranges, grapefruit and tangerines could rise, along with juices made from them. Other possible affected foods include fruit, cocoa and meat from Central and South America and tobacco products from the Caribbean, said Sam Stovall, CFRA’s chief investment strategist.