NEW YORK (TheStreet) - A massive winter storm, dubbed Hercules, put a halt to Friday's commuting and regular work for millions of Northeast residents in what may translate into fewer shopping days over the first weekend of the new year.
Citigroup analyst Oliver Chen estimates that the storm, the first of 2014, will lower fourth-quarter retail sales by 1% with the biggest impact to retailers with a high concentration of stores in the Northeast. Vera Bradley
(VRA - Get Report), TJX
(TJX - Get Report) and American Eagle Outfitters
(AEO - Get Report) are chief among those most likely to be hurt by the storm, Chen wrote in a note to clients Thursday evening.
"We are expecting retail shoppers to stay home Thursday-Saturday and expect ~1% negative impact on 4Q sales given forecasts for major snowfall, high winds, and freezing temps," Chen said. "We expect a retail carryover impact on Saturday givencolder than normal air is expected to follow the storm in the Northeast."
As of Friday morning, the storm had dumped roughly two feet of snow in the Boston area, shutting down hundreds of flights out of Logan Airport as well as JFK and LaGuardia. The governors of New York and Pennsylvania also shut down major highways, according to the Associated Press.
The storm follows a mostly disappointing holiday season in which retailers had to rely on massive promotions to lure shoppers to the stores, thereby cutting into margins and fourth-quarter earnings, the most important quarter of the year for most retailers. Chen estimates retailers generate approximately 55% to 65% of the quarter's revenue in December for the January-ending quarter.
"We acknowledge that retailers have significant exposure to this region may be most affected by unfavorable weather conditions, especially if conditions worsen," the note says, with the most significant impact likely at Vera Bradley with 36% of its stores in the Northeast and 18% in the Midwest, then TJX, with 29% of stores in the Northeast and 16% in the Midwest and finally, American Eagle, with 26% and 18% of stores exposed, respectively.
Retailers under Citigroup's coverage that have the least store concentration to the winter storm include Ross Stores (ROST) and Fossil (FOSL), Chen adds.
Shares of Vera Bradley were falling 0.08% to $23.99 as the market opened on Friday. TJX shares were rising 0.30% to $63.67, while American Eagle was rising 0.34% to $14.78.
--Written by Laurie Kulikowski in New York.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts