U.S. retail sales figures for September surprised to the downside, with food and beverage services accounting for the lion’s share of the disappointment.
The U.S. Census Bureau posted a paltry 0.1% rise in September retail sales, compared to expectations for 0.6%. Food services and drinking places fell 1.8% from the prior month, followed by gas stations, which dropped 0.8% from August.
The decline in dining numbers coincides with the mid-September arrival of Hurricane Florence in the U.S. southeast – particularly in North and South Carolina.
Southern-style restaurant Bojangles (Nasdaq: BOJA), for example, whose operations are concentrated in the southeastern U.S., saw its stock fall around 7.7% in September. Also, shares of Carrols Restaurant Group (Nasdaq: TAST), which primarily operates along the east coast – with a strong presence in the Carolinas – plunged roughly 9.7% over the same period.
By contrast, shareholders of other, more geographically diverse restaurant chains generally experienced far less damage.
Chipotle Mexican Grill’s (NYSE:CMG) stock was off by about 2.4%, McDonalds’ (NYSE: MCD) shares rose around 1%, and Yum! Brands (NYSE: YUM) – operator of iconic U.S. fast food firms Taco Bell, KFC and Pizza Hut – climbed more than 2.6% over the same timeframe.
Meanwhile, further evidence of Hurricane Florence’s likely economic fallout had shown-up in the September jobs report.
The Bureau of Labor Statistics said that prior to September, jobs in the leisure and hospitality industry had been on a “modest upward trend,” and blamed some of the weakness on the potential impact from the storm. Jobs in that sector were little changed over the month at -17,000.
Jefferies money market economist Thomas Simons noted that the “striking weakness in restaurant sales begs the question of whether this is a harbinger of more weakness to come.” He argues that it is not.
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