Tiffany fails to shine in shadow of Trump Tower

Road closures, security barricades and checkpoints around Trump Tower in New York have taken the shine off sales at high-end jeweller Tiffany & Co during the all-important holiday shopping season.

The retailer, famed for its iconic robin’s egg-blue box and costly baubles, said like-for-like sales in November and December fell 2 per cent compared to the prior year period as a ramp up in security near its flagship store in Manhattan hit sales.

Same-store sales — or sales at stores open for more than a year — fell in every market but Japan. In the Americas, by far Tiffany’s largest market, both like-for-like and total sales were down 4 per cent during the period.

In addition to weak tourist spending and the strong dollar, Tiffany said the drop in US sales was exacerbated by a 14 per cent decline at its flagship store on Fifth Avenue, which it blamed on “post-election traffic disruptions”.

The Fifth Avenue store, which is located on the same block as Trump Tower, accounts for nearly 10 per cent of the company’s total sales.

Tiffany first warned in late November — just after Black Friday — about the potential effect that heavy security around the president-elect’s midtown residence would have on its business.

Tuesday’s trading update is the first time it has quantified the impact. The retailer said it does not expect any of the headwinds it is facing to let up this year. However it left its guidance for the 2016 fiscal year ending on January 31 unchanged.

“These overall holiday-period sales results were somewhat lower than we had anticipated, but we continue to benefit from a favourable gross margin and prudent expense management,” said Frederic Cumenal, chief executive officer.

Shares in Tiffany initially fell by as much as 4.1 per cent in early trading. They later recovered slightly after analysts said the sales drop-off at the Fifth Avenue store was not as bad as expected. The shares closed the day 2.5 per cent lower at $79.90.

“The minus 14% comp at the Fifth Avenue store is not thrilling, but less bad than many projected and now we have more clarity going forward,” said analysts at Jefferies. “While the result isn’t thrilling, we are encouraged there is more clarity going forward and expect a gradual improvement as time goes by.”