Since the election, motorcades have been blocking off the area surrounding Trump Tower as protesters continue to gather outside and President-elect Trump holds meetings and travels to and from his offices. It’s an unforeseen misfortune for Tiffany & Co.’s traffic, as the brand’s biggest retail store—its flagship store on Fifth Avenue—sits right across the street.
During the company’s third quarter earnings call Tuesday morning, Mark Aaron, vp of investor relations at Tiffany, said Tiffany is seeing an “adverse affect” on traffic as well as a continuation of sales softness at that store relative to last year and compared to other stores. Aaron wouldn’t reveal the specifics of the sales drop, merely stating that the store usually carries under 10 percent of the brand’s global revenue, and this quarter, that hasn’t changed.
“Under 10 percent” is a broad scale for a specific store’s sales, however. And Tiffany CFO Mark Erceg expressed concerns that the action on Fifth Avenue would continue to impact traffic during the critical holiday sales period.
“Given the close proximity of our Fifth Avenue flagship to Trump Tower, we have noticed that recent election activity has caused disruptions to pedestrian foot traffic,” said Erceg. “State officials and security are trying to minimize disruptions, but considering the importance of our flagship store to the holiday selling season, we are expecting that could impact sales.”
Overall, sales in the Americas had dipped 2 percent for Tiffany & Co., a pattern seen by other American brands like Ralph Lauren. Tiffany managed to see a modest turnaround in net sales and earnings, with a 1 percent increase of sales to $949 million and a 5 percent increase of earnings to $95 in the quarter compared to the same time period last year.
For Tiffany, the silver lining balancing the harmful effects of the election could be found in China and Japan, where sales increased 4 percent and 13 percent during the quarter, respectively.
Erceg spoke to a few actions Tiffany was taking in an effort to improve sales: The company was increasing its inventory of “fashion jewelry,” lower priced items like the T and Tiffany Love collections that fall under $500. There, the company increased its number of SKUs by a double-digit percentage. These collections have been heavily promoted to a younger audience on Twitter and also Snapchat, where Tiffany became the first luxury brand to sponsor a paid lens earlier this year. The #ReturntoLove campaign lens was used by prolific Snapchat user and Gen Z favorite Kylie Jenner.
These campaigns helped push the sales of fashion jewelry, which increased. Meanwhile, sales of statement and fine jewelry—categories that were growing at the same time last year—declined.
“This collection has always appealed to a younger demo of teenagers and college students,” said Diana Hong, vp of global digital marketing at Tiffany in a previous interview. “We know there’s a whole new generation out there, so we’ve centered around the millennials and Gen Z.”
Tiffany is also taking care to improve the efficiency of its store network: The company has plans to open 11 stores in high foot traffic areas, and to close or relocate 12 of its underperforming stores. Erceg also said that the company is overhauling its internal IT systems in an effort to streamline inventory and improve customer experience both in stores and online.
“Staying static in the digital age is not a recipe for success,” said Bryan Segal, CEO of Engagement Labs. “The greatest strategy is understanding that today’s strategy is not your strategy tomorrow. [Tiffany has] shown they can adopt to what the audience wants.”
