Wal-Mart Stores Inc. (WMT) Tuesday said 123 of its U.S. stores had closed due to Hurricane Katrina (search), though that number diminished later in the morning, while analysts cautioned that the storm's impact on gas prices could hit retail sales even harder later.

Merrill Lynch noted in a report that the states hit hardest do not have a lot of stores. The savage storm hit Louisiana on Monday with 140 mph winds, then swept across Mississippi, Alabama and Tennessee.

"Instead, if the hurricane contributes to even higher gas prices, the effect is likely to be broad-based, as consumers look to trim spending further." Merrill Lynch said in a research note. "We do not anticipate a wholesale retrenchment, but we could see more trading down and less discretionary expenditures."

Already lofty gas prices could rise further due to refinery outages and fears about hurricane-related production cuts.

At Wal-Mart, as many as 123 of the company's 3,725 U.S. Wal-Mart and Sam's club (search) stores were closed Tuesday morning due to Katrina, though that number was down to 70 Tuesday afternoon, spokeswoman Sharon Weber said. Two distribution centers were also closed.

The stock hit its lowest point in three-years Tuesday and is down 15 percent for the year.

Home improvement retailer Lowe's Cos. Inc. (LOW) said only 10 of its stores were closed Tuesday, down from 23 on Monday.

Other retailers with a large presence in the devastated area had yet to tally store closings.

"We're still assessing the damage to stores," said Brian Levine, a spokesman for Office Depot Inc. (ODP) which has 83 stores — or about 8.2 percent — in the four states hit by the hurricane.

Fred's Inc. (FRED) , a discount retailer, has about 17.5 percent of its stores in Louisiana and Mississippi, according to a report by BB&T Capital Markets. A Fred's spokesman could not be reached for comment on closings.

The hurricane caused some 50 to 60 O'Reilly Automotive Inc. (ORLY) stores in the coastal region to close Monday, as well as a distribution center on Mobile Bay, said Greg Henslee, co-president of the auto parts retailer. The chain has 1,286 stores.

Some stores were still closed Tuesday, he said.

Henslee said he expects increased demand for parts because of storm-related car repairs once owners meet more pressing needs for housing, though sales would initially be down because of the store closings.

Advance Auto Parts Inc. (AAP) said it would not disclose the impact from the hurricane on the roughly 100 stores it has in Louisiana and Mississippi. Those stores are about 3.7 percent of the company's total.

Drugstore operator CVS Corp. (CVS) said that several dozen pharmacy were closed due to the storm and electronics retailer Circuit City Stores Inc. (CC) said 11 of its stores were closed.

Analysts from other industries also were assessing the effects of the storm.

"If we have significant refinery capacity problems due to Katrina, that certainly puts more upward pressure on gas prices, which in turn I think has to affect restaurant demand," said Wendell Perkins, chief investment officer of the Johnson Family of Funds.

Restaurant analysts said closures from the hurricane itself were unlikely to have a big impact on sales and profits of big chains like McDonald's Corp. (MCD) because the region represents a small percentage of their overall businesses.

A McDonald's spokesman could not be reached for comment Tuesday.

Another expert said the hurricane may even give chains in the affected areas a short-term boost in the immediate aftermath of the storm.

"Restaurants have portable generators and backup plans — homes don't," said Malcolm Knapp, president of restaurant research firm Malcolm M. Knapp Inc. "(Consumers) go where they can get fed."