Say What? Retailers Actually Did Better Following 9/11

SunTrust Robinson Humprhey analyst David Magee had an interesting note related to specialty retailers following Friday's deadly terrorist attack in Paris. Going back to consumer activity following 9/11, Magee notes that surprisingly many retailers saw an uptick in sales in the two quarters following the terrorist attacks.

"While this may seem counter-intuitive, recall that many consumers canceled vacation travel plans and, as a result, felt somewhat more "flush,"", he commented. "In addition, we recall there being escalating interest in home-based activities (“nesting.”)."

Following 9/11, while most of the specialty retailers under their current coverage did see some acceleration, they note that home-centric retailers seem to benefit the most, while sporting goods companies were relatively less affected.

Related to stock prices, the valuations of the specialty retailers were on a downtrend in the two months prior to the 9/11 tragedy. Conversely, there was a major subsequent bounce which they would attribute to news of better business trends. Interesting to note that the average out-year P/E then was roughly 2x current levels.

In the aftermath of the Paris attacks, the firm still thinks warm weather and sluggish consumer demand are greater risks going into the holidays.

Also, to the extent that consumers switch to online shopping to avoid terror threat in public places, most of these retailers currently have well-developed e-commerce in place, the firm notes:

Stocks noted in the report:

Bed Bath & Beyond (NASDAQ: BBBY)
Best Buy (NYSE: BBY)
Dick's Sporting Goods (NYSE: DKS)
Fred's (NASDAQ: FRED)
GameStop (NYSE: GME)
Hibbett Sports (NASDAQ: HIBB)
Kirkland's (NASDAQ: KIRK)
Pier 1 Imports (NYSE: PIR)
Tractor Supply (NASDAQ: TSCO)
Whole Foods Market (NASDAQ: WFM)
Williams-Sonoma (NYSE: WSM)

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