Tiffany & Co vs Trump: Jewellers' Manhattan store profit declines

Luxury jeweller said sales have suffered at its flagship store amid security precautions. Photo / Mark Kauzlarich

Of the more than 300 Tiffany & Co. Jewellery stores across the globe, perhaps none is more important than the flagship outpost on 5th Avenue in New York.

A torrent of tourists pass by it each day, many of them ponying up for the luxury trinkets from a Manhattan institution. And with the likes of Gucci, Bergdorf Goodman, Dior and Fendi all within a block or two, plenty of big-spending locals and international travellers see the area as a prime shopping destination.

But the location has a temporary downside: It is situated next to Trump Tower.

The president-elect has been holed up there with his top aides interviewing potential cabinet appointees, and even before his election, Trump often retreated to his penthouse there in between stops on the campaign trail.

On Tuesday, Tiffany executives acknowledged that business has been hurt by the security-related disruptions that have come with having Donald Trump as a neighbour.

As it reported its third-quarter earnings, the company said in a press release that because of that situation, "management has noted some adverse effect on traffic in that store and a continuation of sales softness relative to prior year and to the company's other US stores this year."

The luxury jewellery chain was quick to note that the 5th Avenue store represents less than 10 per cent of the company's overall sales. So, its 2 per cent decline in global sales this quarter reflects a host of other challenges.

It's not clear how fast the problem is going to go away: Since Donald Trump was elected, Trump Tower has become his home base for hammering out the details of his transition. Some areas have been barricaded or otherwise restricted for security reasons, making it hard for pedestrians to get around.

The latest sales results don't even reflect the most recent weeks of transition-related activity; they are for a quarter that ended October 31.

Management has noted some adverse effect on traffic in that store and a continuation of sales softness relative to prior year and to the company's other US stores this year.

Tiffany & Co

Then there's the fact that Trump reportedly plans to be travel back and forth frequently between the Trump Tower and the White House after the transition, raising the spectre that the 5th Avenue security precautions could come back intermittently throughout his presidency.

This is likely why Tiffany also said Tuesday that it "cannot provide any assurance that sales in that store will not be negatively affected by this activity in the fourth quarter or in any future period."

Flagship stores are not just important for retailers because of the sales they pull down: They are critically important marketing vehicles. Chains hope that when shoppers see their outposts on the toniest urban streets, it will favourably shape their perception on the brand for a long time.

But the retailer could lose future opportunities to put new customers under the spell of the "Blue Box" if people start avoiding Tiffany's landmark location because it is a pedestrian's nightmare.