Bloomingdale’s, FAO Schwarz To Close Doors Early

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

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% discount. FAO Schwarz is closing at 6 p.m. instead of 9 p.m. during the strike so employees can get home, Chief Executive Officer Ed Schmults, said.


New York City’s biggest retailers, including Federated Department Stores’s Bloomingdale’s and Macy’s and Saks Incorporated’s Saks Fifth Avenue, struggled to attract customers during the last four holiday shopping days. Those and other stores will lose $25 million to $30 million in sales today, after losing $100 million to $200 million yesterday following the strike’s start, Kurt Salmon Associates’s Michelle Bogan said.


“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, 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 yesterday did not specifying the earlier closing time. Its normal closing is 10 p.m. It was offering 15% off, instead of the usual 10%, 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 & Company, the biggest U.S. luxury-jewelry retailer; Gap, the largest U.S. apparel chain, and women’s clothing-seller Ann Taylor Stores were counting on these final holiday shopping days to boost lagging sales. Half of Americans had completed their holiday shopping by December 18, compared with 65% at the same time last year, according to America’s Research Group in Charleston, S.C.


As shoppers get efficient and switch to the Internet and their neighborhood shops, retailers will lose out on a lot of impulse purchases, said Ms. Bogan, a retail strategist at New York-based Kurt Salmon. The holiday season accounts for about a quarter of American retailers’ annual sales.


Manhattan represents 10% of sales at stores open at least a year at Cincinnati-based Federated, which also owns Lord & Taylor, and 20% of such sales at Birmingham, Ala.-based Saks’s Saks Fifth Avenue division, according to Michelle Tan, an analyst with UBS Securities LLC in New York. She rates Federated “buy 1” and Saks “reduce 2.”


Each day 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 yesterday.


American same-store sales are expected to rise 3% to 3.5% in December, the International Council of Shopping Centers reiterated yesterday.


Federated’s shares fell 1 cent to $65.22 at 2:21 p.m. in New York Stock Exchange composite trading. Before today, they had climbed 13% this year. Saks’s shares gained 6 cents to $16.33.


Mayor Bloomberg said Federated Chief Executive Terry Lundgren told him sales at big New York department stores were off 30% to 40% on December 16 on 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 hot lines.


“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 Corporation, and came to work.


Should the strike continue into Friday, 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.


Closely held Neiman Marcus Group owns the two Bergdorf Goodman stores on Fifth Avenue. Three percent of the Dallas-based retailer’s total quarterly sales could be jeopardized, Christopher Kresco, a high yield bond analyst at Montpelier, Vt.-based KDP Investment Advisors, wrote in a report yesterday.


Retailers will likely try to reschedule promotions, which now won’t generate sales, Mr. Davidowitz said.


“The plan will be to play the week after Christmas bigger,” he said. “It’s a big week anyway. You pound a lot of extra promotions into that week, have post-strike sales.”


While Tiffany’s counts on its flagship location on Fifth Avenue for 10% 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 in New York, wrote in a report yesterday. Tourists typically stay in a Midtown hotel, walking distance to the store, he added. He rates the shares “neutral.”


The New York Sun

© 2025 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use