Tiffany & Co (tif) said Tuesday that the recent protests and road closures at Trump Tower near its Manhattan flagship store hurt third-quarter sales, and the jeweler hinted that the problem could last a long time.
Tiffany's iconic flagship on Manhattan's 5th Avenue generates abut 8% of company sales. So its proximity to President-Elect Donald Trump's residence at Trump Tower, which has been the scene of periodic protests since his election three weeks ago and is now cordoned off by Secret Service, has been painful.
In a press release disclosing its most recent quarterly results, Tiffany said "management has noted some adverse effect on traffic in that store and a continuation of sales softness" compared with its prior results and those of its other U.S. stores. The company also said it couldn't promise that the hit to traffic and sales won't continue in the current holiday season quarter or beyond.
While shoppers can easily enter Tiffany's store through its 57th Street entrance, the heavy security around Trump Tower on Fifth Avenue a block away has lowered visits by shoppers, many of whom are tourists from Europe and China who are already staying away from Fifth Avenue's luxury stores because of a strong U.S. dollar.
Tiffany said Tuesday that comparable sales fell 2% in the Americas, a drop stemming primarily from a pullback by U.S. customers, but mitigated by more spending by Japanese tourists. The U.S. is Tiffany's biggest market, generating almost half of its sales.
The jeweler's shares did rise 5% in premarket trading as Tiffany reported its first total sales increase in eight quarters thanks to strong results in Japan and China. Sales in China, where Tiffany has been expanding aggressively, rose by "double-digits," in percentage terms, the company said.
Sales at established stores, which strips out the impact of newly closed or open stores, fell 2% in the quarter ended Oct. 31. Analysts on average had expected a 2.8% decrease, according to research firm Consensus Metrix. Tiffany CEO Frédéric Cumenal in a statement pointed to "economic and other challenges that we believe are continuing to affect customer demand" to explain sluggishness in many key markets.
Still, Tiffany's net sales edged up 1.2% to $949.3 million from $938.2 million a year earlier. Net income rose 4.5% to $95.1 million or 76 cents per share.