Bed Bath & Beyond shares plummeted last week on the news that the retail giant missed its quarterly forecasts. In fact, its revenue projections were $70 million off. Executives cited several reasons for the missed forecast, including Hurricane Harvey, which devastated portions of Texas and Louisiana in late August.
Analysts, however, are skeptical of Bed Bath & Beyond’s logic when it comes to the impact of Harvey. “As much as it is true that Harvey has been unhelpful, the fact remains that Bed Bath & Beyond’s revenue and profit growth has been on a downward trajectory for some time,” Neil Saunders, managing director of GlobalData Retail, told MarketWatch. Instead, experts point to Bed Bath & Beyond’s store experience, promotional strategies and competition from both e-commerce and brick-and-mortar for its poor performance.
The discrepancy between Bed Bath & Beyond’s analysis and that of industry experts
We can expect retailers to be adversely affected by hurricanes this year, but as this retailer blames Hurricane Harvey for such a large impact, it begs the questions:
- Can retailers ever truly measure the impact of a natural disaster like Hurricane Harvey?
- Is it at all possible to prepare for such unexpected events?
- Just how far-reaching are the effects of a local disaster on the national economy?
Discussion: Retailer blames Hurricane Harvey for missed revenue projections
Prevedere’s senior economist Andrew Duguay conducted an Immediate Analysis of the Impact of Hurricanes Harvey and Irma, including lessons learned from Katrina in 2005. Watch his full webinar and insights here. In short, his analysis confirms the analysts’ view that Harvey likely had little to do with Bed Bath & Beyond’s weak performance in the last quarter.
By creating an economic model of the impacts of Katrina and applying the findings to the areas impacted by Harvey and Irma, Duguay noted that the local economies are likely to see a downshift in retail spending for at least four months after the disasters. After Katrina, the downshift peaked two months after the storm, with retail sales an average of 9% below where they would have been with no storm.
The spending that is done in Houston and Florida over the next few months will likely shift from discretionary items like electronics and travel to disaster-recovery necessities like building materials.
On a national level, however, Duguay’s analysis shows that the outlook for Q4 2017 and 2018 are unchanged by the hurricanes. Retailers and CPG companies should still plan for a strong holiday season, with leading indicators pointing in a positive direction over the next few months.
Watch our webinar for a more detailed analysis of the economic impacts of Hurricanes Harvey and Irma.
Discussion: Economic Impact of Hurricanes Harvey and Irma topics include:
Andrew Duguay, Sr. Economist at Prevedere, provides critical insights related to the future economic impact of Hurricanes Harvey and Irma.
- How the impact of Hurricane Katrina can be used to understand Harvey, Irma, and future natural disasters
- What companies with a national and regional presence should expect
- How retailers and consumer goods companies should plan for the remainder of 2017 and beginning of 2018
About the SpeakerAndrew Duguay is a Senior Economist for Prevedere, a predictive analytics company that helps provides business leaders a real-time view of their company’s future performance. Prior to his role at Prevedere, Andrew was a Senior Economist at ITR Economics. Andrew’s commentary and expertise have been featured in NPR, Reuters, and other publications. Andrew has an MBA and a degree in Economics. He has received a Certificate in Professional Forecasting from the Institute for Business Forecasting and Certificates in Economic Measurement, Applied Econometrics, and Time-Series Analysis and Forecasting from the National Association for Business Economics.