Retailers, consumers and prices
So goes Wall Street, so goes Fifth Avenue retailers
In the past week, Lehman has failed, Merrill Lynch agreed to be acquired by Bank of America, and the government had to step in to keep giant insurer AIG from failing.
It has created chaos on Wall Street and expectations of thousands of impending job losses. In August alone, New York City’s securities companies axed 10,000 workers.
It is the exact opposite of what retailers needed headed into what is expected to be one of the worst holiday season in years.
In a research note, Goldman Sachs highlights which retailers may fare the worst.
Wall Street’s financial turmoil heading into the holiday season is likely to negatively impact key NY centric retailers with meaningful flagship
Saks and Tiffany top the list with each of their flagships accounting for 20% and 10% of total sales, respectively. These key stores have been outperforming an already weakened store base as tourism has provided a bright spot. In light of a dampened worldwide wealth effect and strengthening dollar, more modest tourism gains should provide less of an offset to today’s worsening domestic demand.
….Luxury retailers and brands such as Coach, Nordstrom, and Ralph Lauren, are likely to also be pressured this season as waning Wall St bonuses and volatile equity markets erode confidence at the high end. While their NY flagships (Nordstrom is not in NYC) do not carry the same significance as those of Tiffany and Saks, we expect results to be impacted nonetheless