Skip to main content

Labor trouble in the Big Apple could mean Christmas coal for some darlings of Wall Street.

With New York City's subways at a standstill for a second day, stores along Fifth Avenue are losing crucial sales as shoppers avoid the transportation crunch.

"The transit strike is devastating for retail," said Howard Davidowitz, chairman of Davidowitz & Associates, retail consulting and investment banking firm. "It couldn't have come at a worse time, and we don't know how long it's going to go on."

For major retail chains with stores all across the nation, such as

Home Depot

(HD) - Get Home Depot, Inc. (HD) Report

or

Best Buy

(BBY) - Get Best Buy Co., Inc. Report

, the strike is relatively insignificant news. But chains that have signature stores in the city -- some of which are longtime Wall Street favorites -- are expected to feel pain.

For instance, analysts estimate that

Saks'

(SKS)

Fifth Avenue division rings roughly 20% of its total sales from its flagship store on Fifth Avenue.

Federated's

undefined

TheStreet Recommends

Macy's chain runs the largest department store in the country on 34th Street. Bloomingdale's has a flagship on 59th. The most famous jewelry store in the world is run by

Tiffany's

(TIF) - Get Tiffany & Co. Report

in Manhattan, and countless other chains have major retail outlets in the city.

"Our New York flagship store is staffed and open for business," said Mark Aaron, the vice president of investor relations for Tiffany's. He declined to comment on whether the strike would have a negative impact on business, but he did say the New York store accounts for roughly 10% of Tiffany's total sales.

"All of these stores are getting crushed by this," Davidowitz said. "Take Bloomingdale's. It's been doing very well lately, and its satellite stores around the country are going to do well this season. But its big, signature store -- the mother lode -- is going to suffer."

Michael Niemera, chief economist and director of research with the International Council of Shopping Centers, said the strike would be a negative for retailers this holiday season, but it remains to be seen how damaging it will be to the sector overall.

"New Yorkers are a fairly savvy group when it comes to shopping online," Niemera said. "It's unclear whether this will significantly reduce total sales, or if it will just delay them or steer them into other retail channels."

Niemera is sticking with his forecast for a 3% to 3.5% gain in overall same-store sales for major retailers in November and December compared with the same period last year. Same-store sales are a key retail metric, gauging sales at stores that have been open for at least a year. He said the strike could shave a quarter of a percentage point off the overall number in a worst-case scenario.

"We're still looking at a moderate holiday season," Niemera said. "It's not going to be anything spectacular, but it won't be a disaster either."

Retailers have clearly been forced into aggressive promotions and discounts to lure consumers this year.

Wal-Mart

(WMT) - Get Walmart Inc. Report

, the world's largest retailer, slashed prices early in anticipation of heightened bargain-hunting. The discounter said over the weekend that it was sticking with its previous guidance for a gain in same-store sales of 2% to 4% in December.

This week's sales results will be inflated compared with last year's by an extra selling day before Christmas.

"Things have certainly been especially promotional this season, but I haven't seen any signs that companies are being forced to lower prices more than they planned to," Niemera said.

Get Jim Cramer's picks for 2006

.