Ralph Lauren announced Tuesday that it will close its flagship store on Fifth Avenue and 55th Street, citing falling revenue and rising rents. As reported by the New York Times, the company, which opened this location in 2014, plans to reorganize by investing more in their online stores. Keeping afloat a business on New York City’s most expensive shopping strip is not a problem unique to Ralph Lauren; Kenneth Cole, Juicy Couture, and H&M have also recently closed their doors. Soaring rents, plus a drop in tourism, has lead to an increase in vacant space along Fifth Avenue.
While rents continue to skyrocket for a square foot of retail space on Fifth Avenue, with an average asking price almost $2,900 per square foot, these companies also have to deal with e-commerce and fewer tourists to spend money in their brick-and-mortar stores. According to the Times, “From 49th to 60th Streets, the availability rate of leases — one gauge of turnover — reached 15.9 percent at the end of last year, up from 6.1 percent five years earlier.” Plus, as 6sqft previously learned, New York City officials expected a drop in tourism from foreigners after President Trump first announced his travel ban, a decline for the first time in seven years. This could play a significant role in the city’s overall economy, as foreign tourists tend to spend more than domestic travelers.
Shares of Ralph Lauren fell nearly 4.5 percent, closing at $77.74 on Tuesday, the biggest same-day drop in two months. In the most recent quarter, Ralph Lauren’s total revenue fell more than 12 percent to $1.7 billion and the company has cut 1,000 jobs and also plans on closing 50 stores by the end of this fiscal year.
Closing the flagship store comes after an announcement in February that chief executive Stefan Larsson was leaving the company, due to “creative differences.” Larsson’s job included leading the company’s reinvention by focusing on more creative designs that would be produced faster. Ralph Lauren’s Polo store officially closes April 15, but its seven other stores in the city remain open.
[Via New York Times]