- The Washington Times - Wednesday, December 21, 2005

Transit strike forces big retailers to close early NEW YORK (Bloomberg) — Bloomingdale’s put out signs yesterday saying it was closing early as New York City’s first full-scale transit strike in 25 years kept customers away. The department store’s staff urged the few shoppers left to take advantage of a two-day 15 percent discount. FAO Schwarz Inc. closed at 6 p.m. instead of 9 p.m. during the strike so employees could return home, said Chief Executive Officer Ed Schmults. New York City’s biggest retailers, including Bloomingdale’s Inc., Macy’s Inc. and Saks Fifth Avenue, struggled to attract customers during the last four holiday shopping days. Those and other stores were expected to lose up to $30 million in sales yesterday after losing $100 million to $200 million Tuesday following the strike’s start, said Michelle Bogan of Kurt Salmon Associates Inc.. “These are critical days, and there is no way to make up the loss even of a day or two,” said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York consulting and investment-banking firm. “Do you think people are going to be in the mood to go shopping? Of course not.” Bloomingdale’s signs did not specify the earlier closing time. Its normal closing is 10 p.m. It was offering 15 percent off, instead of the usual 10 percent, for two days, instead of one day, to customers who applied for a new Bloomingdale’s charge card, and it doubled its incentives for existing cardholders. Chains including Tiffany & Co., Gap Inc. and women’s clothing-seller Ann Taylor Stores Corp. were counting on the final holiday shopping days to boost lagging sales. Half of Americans had completed their holiday shopping by Sunday, compared with 65 percent at the same time last year, according to America’s Research Group in Charleston, S.C. As shoppers become efficient and switch to the Internet and their neighborhood shops, retailers will lose impulse purchases, said Ms. Bogan, a retail strategist at Kurt Salmon. The Christmas season accounts for about a quarter of U.S. retailers’ annual sales. Manhattan represents 10 percent of sales at stores open at least a year at Cincinnati retailer Federated, which owns Macy’s, Bloomingdale’s and Lord & Taylor and 20 percent of such sales at Saks Fifth Avenue, according to Michelle Tan, an analyst with UBS Securities LLC in New York. Each day that transit workers remain on the picket lines will trim December same-store sales by 0.15 percentage point at Federated and 0.3 percentage point at Saks Fifth Avenue, Ms. Tan wrote in her research note Tuesday. New York City Mayor Michael R. Bloomberg said Federated Chief Executive Officer Terry Lundgren told him sales at big New York department stores were off 30 percent to 40 percent Friday with the possibility of a strike. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. Bloomingdale’s, Macy’s and Saks took measures to help employees get to work, providing bicycle storage, reimbursing employees for parking and setting up Web sites and hotlines. Macy’s was giving an extra compensation day to employees who worked Tuesday and two days if they worked a 12-hour shift, said Michelle Dingle, 27, who helps in the store’s Kids Headquarters. Her section, which caters to teens, wasn’t busy, even though it was having a one-day sale offering more than 50 percent off. “Yesterday, the first day of the strike, we had very heavy traffic in the morning and into the late afternoon,” said FAO Schwarz’s Mr. Schmults. “Then we saw a pretty steep drop-off, which made the early close less of a financial hit.” He said one employee drove in at 3 a.m. and slept in his car and another had his bike break down, bought a new one at Target Corp. and came to work. Should the strike continue into tomorrow, stores won’t meet their sales plans and will cut prices, lowering margins, said Walter Loeb, president of Loeb Associates, a retail-consulting firm in New York. Retailers probably will try to reschedule promotional marketing, which now won’t generate sales, Mr. Davidowitz said. While Tiffany’s counts on its flagship location on Fifth Avenue for 10 percent of company sales, the overall impact of the strike should be minimal as commuters shift their buying to one of its seven other stores in the region, Mark Friedman, an analyst with Merrill Lynch & Co. in New York, wrote Tuesday. Tourists typically stay in a midtown hotel, walking distance to the store, he added. He rates the shares “neutral.” At Century 21 Department Store in downtown Manhattan, a sign outside the door Tuesday noted, “Store is subject to early closing due to MTA Strike,” and inside crowds were about half of what they usually were, estimated Emily Spray, 43, a regular shopper. “It’s improved my life because there are no lines,” said Mrs. Spray, who was prepared to load her Christmas shopping on a baby seat.



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