Another Retailer Goes Bankrupt, Shutters Stores, While Tiffany Blames Trump Tower for US Holiday Sales Debacle

Wednesday, January 18, 2017
By Paul Martin

by Wolf Richter
WolfStreet.com
Jan 17, 2017

And American Apparel shuts down.

This time a year ago, Tiffany & Co. cut its full-year forecast after reporting a drop in holiday sales. It blamed sluggish tourist spending and the strong dollar. Rinse and repeat. But today, it changed the culprit to the brouhaha around Trump Tower, the neighbor of its flagship Fifth Avenue store, where sales over the two-month holiday period plunged 14%.

In its holiday sales update, Tiffany said that in in the Americas, which represent half of its global business, total sales fell 4% year-over-year, to $483 million, over the holiday period, and comparable store sales also fell 4%. The drop in sales was due to “local customer spending,” it said. So this time, it didn’t blame the hapless tourists.

And the ongoing decline in sales in the US was “exacerbated” by the 14% plunge at its flagship store on Fifth Avenue. It attributed this plunge “at least partly” to the “traffic disruptions” around Trump Tower.

These “traffic disruptions,” with the President-Elect holding court next door at Trump Tower, have been a problem not just for Tiffany but also for other retailers nearby. In addition to the enormous security efforts – the barricades, dump trucks, checkpoints, and armed-to-the-teeth police around Trump Tower – there have been protesters, waves of tourists, and an army of journalists that all might discourage some well-heeled shoppers from entering or even getting near Tiffany.

Alas, Tiffany’s flagship store accounts for less than 10% of global sales, the company said in its third-quarter earnings report last November, when it already warned about “election-related activity.” CFO Mark Erceg said at the time that it had caused “some minor disruptions to pedestrian foot traffic at the store.”

Globally, Tiffany’s holiday business was a mixed bag: In Europe, sales during the two months plunged 10% year-over-year, and comparable store sales plunged 11%. Eliminating currency fluctuations, total sales were flat and comparable store sales fell 4%. In Asia Pacific, sales looked better, though comparable stores sales also dropped. In Japan sales were hot, with comparable store sales up 12% – “partly offset by lower wholesale sales.” So global sales inched up 1%.

And in this tough brick-and-mortar retail environment in the US, another retail chain joined the growing list of retailer bankruptcies, while another company that already filed, is shuttering all its stores and manufacturing operations.

The Rest…HERE

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