The ongoing protests outside Trump Tower could cost surrounding retailers more than $500 million in sales through year end, with further financial pain possible if the security zone remains in place through the New Year.
“We believe the business district and the flagship stores like Tiffany, Nike, Henri Bendel, Gucci, Louis Vuitton and Prada are all asking the NYPD to help them limit the impact of these protests,” said Macquarie analyst Laurent Vasilescu, who noted that Tiffany & Co. was among the retailers whose Fifth Avenue entrance remained closed amid the heightened police presence and crowds outside President-elect Donald Trump’s New York City home.
In addition to street closures, metal barricades, police officers and some more than 5,000 protesters, retail access has been significantly hampered ahead of the frothy fourth-quarter gifting season. In the case of Tiffany, 16 percent of Americas revenue and eight percent of global revenue coming from sales at its flagship store.
“Every 10 percent comp decline at the flagship store translates to a 160 basis points headwind to Americas comp and 80 basis points headwind to overall comps in the fourth quarter of 2016,” Vasilescu added.
According to the broker, Tiffany’s flagship store generates approximately $100 million of its annual $310 million in November and December, equating to $4.5 million in state sales tax. Extrapolated to surrounding stores, upwards of half a billion, or $22.5 million in tax revenue, could be at risk.
But analysts expect city officials will move to stave any economic impact of the protests, especially should they continue past the January inauguration, depending on the frequency of Trump’s visits to the area down from Washington, D.C..
“We think the city will likely place the protesters on a side street like 56th street to limit the economic loss to tax revenues from sales,” Vasilescu said, who has an “outperform” rating on the stock and a 12-month price target of $82. “With this potential loss in tax revenue, we believe NYC will do all it can to try to reduce any economic impact from these protests,” he added.
Tiffany & Co. is slated to report third-quarter earnings on Nov.29, with analysts’ consensus forecast expecting earnings per share of 67 cents, versus 70 cents on the prior corresponding period. The stock fell 3 percent today to $75.96 and are down from a 52-week high of $81.89.
The jeweler and its peers lining the street from 49th to 60th pay, on average, around $3,500 per square foot in rent. Amid the ongoing unrest in the area, authorities recently informed local business advisers that they would make adjustments to the current setup in coming days, with the assumption those efforts would involve a push to improve customer accessibility and appeal.
The New York Police Department and the Secret Service are slated to meet on Thursday to discuss security measures for when Trump visits his 58th-story penthouse, should he split his time between the White House and Trump Tower on a regular basis. One option being touted is to shut down Fifth Avenue when the president-elect is in town, which would further cripple retailers’ hip pockets in 2017.
