The pandemic-induced lull in global tourism is taking its toll on several large retail chains, including Abercrombie & Fitch and Tiffany & Co., which are struggling to make up for a lack of foot traffic.
As a result, Abercrombie is closing some of its doors in prime tourist cities.
“Tourism has kind of ground to a halt,” due to the worldwide coronavirus pandemic, Scott Lipesky, Abercrombie & Fitch’s chief financial officer, told the Financial Times, leading to a “meaningfully worse” performance at stores that normally rely on visitors.
Abercrombie will close seven of its stores, six of which are in Europe. Tourism normally accounts for 11 percent of the EU’s GDP.
The store closures include large locations in London, Paris and Munich. Those three as well as one in Düsseldorf are closing before their leases are up.
The U.S. based brand is also closing stores in Madrid, Brussels, and Fukuoka.
The stores account for roughly a tenth of the retailer’s total square footage of storefronts — about 200,000 square feet.
Abercrombie reported on Tues. (Nov. 24) that revenue fell 5 percent in the third quarter, to $820 million, the Financial Times noted.
Luxury jeweler Tiffany & Co. reported that sales fell 16 percent in the Americas and 6 percent in Europe, pointing to the halt in tourism as a cause, according to the news outlet.
But optimism exists: Tiffany's sales in China are pointing upward, according to FT, noting that Tiffany reported its mainland China sales had grown “dramatically” in the third quarter, as same-store sales almost doubled year over year.
PYMNTS reported that a four-month tourism shutdown could cost the global GDP $1.2 trillion, 1.5 percent of the total. That was in July; the recent second rise of cases beginning in September has sent new shock waves throughout the world.
But Abercrombie, for its part, also said in its earnings call that it is working on a “multiyear strategy of reducing dependence on tourist-driven locations,” FT reported, in a decade where social media and digital marketing are more reliable ways to attract customers.
