Tourism slump hits global retailers

International retail chains were on Tuesday counting the cost of the collapse in world travel, as Abercrombie & Fitch said it would speed up the closure of flagship stores in several major tourist destinations and Tiffany said its sales fell sharply in Europe and the Americas.

Abercrombie & Fitch, the clothing chain, announced it would shut large stores in London, Paris and five other locations after a slump in visitors during the pandemic compounded their long-running underperformance.

The stores being closed — almost all in Europe, and four before their leases were due to expire — occupy about 200,000 sq ft, or about a tenth of the US-based clothing brand’s total space.

“Tourism has kind of ground to a halt” during the pandemic, Scott Lipesky, Abercrombie & Fitch’s chief financial officer, said in an interview. That had contributed to a “meaningfully worse” performance at stores popular with tourists.

The company added that it had a “multiyear strategy of reducing dependence on tourist-driven locations”.

Whereas more than a decade ago the stores were “really the way into our brand” for foreign travellers, Mr Lipesky said, “we can reach these customers these days through social media and digital marketing”.

Flagship stores near Savile Row in London, which Abercrombie & Fitch has occupied for 13 years, and in Paris and Munich are to be closed by the end of January, well before their leases expire. A Düsseldorf store closed in the third quarter, which was also earlier than planned.

In addition to the early exits, the company said it would shut stores in Brussels, Madrid and Fukuoka in early January due to natural lease expirations.

Clothing stores such as Abercrombie & Fitch have been particularly hard hit in the pandemic. The Ohio-based company, which also runs the Hollister brand, on Tuesday reported a 5 per cent decline in third-quarter net sales to $820m. A 43 per cent rise in online sales helped to soften the blow.

The global travel slump has also hurt upmarket New York-based jeweller Tiffany. Sales fell 16 per cent to $354m in the Americas and 6 per cent in Europe to $104m. In both regions, executives cited the drop in foreign tourism because of Covid-19.

However, a sharp improvement in the Asia-Pacific region helped compensate. Tiffany said sales in mainland China “grew dramatically” in the third quarter, with same-store sales “nearly doubling” compared with the same period a year ago.

Net sales across Tiffany, which is being bought by French luxury group LVMH, ticked 1 per cent lower year on year to $1bn.

Other retailers counting the cost of the tourism slump include department store chain Macy’s, which last week reported a 14 per cent decline in third-quarter revenues.

Jeffrey Gennette, its chief executive, said the company’s worst-performing stores were in downtown locations, such as the Macy’s in Manhattan’s Herald Square and nearby Bloomingdale’s, which the group also owns.

He said the collapse in tourism, as well as fewer office workers commuting to the city, were the two single biggest factors behind the decline.

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