Juicy Couture is abandoning Madison Avenue, reflecting hard times and high rents along the posh Manhattan retail venue.
This story first appeared in the July 10, 2009 issue of WWD. Subscribe Today.
The division of Liz Claiborne Inc. has been paying $2 million in annual rent for its two-level, 3,300-square-foot store at Madison and 70th Street.
“It’s been a lot to pay,” said Edgar Huber, Juicy Couture’s president. “The lease was signed at the height of commercial real estate in New York. Landlords will have to bring down prices. Nobody will be willing to pay them.”
Madison Avenue is already blotted with vacancies and retailers ready to pack up and leave. There are 49 locations available from 59th to 79th streets, including 20 vacancies and 29 sites where retailers want out, according to Robert K. Futterman & Associates, retail real estate brokers.
Rents on Madison remain high, though they have begun to decline. As of last spring, rents were down 8 percent to $979 per square foot from $1,066 in 2008, according to the Real Estate Board of New York.
In addition to the rent, Juicy Couture’s business on Madison has been hurt by slower customer traffic as consumers pull back on apparel purchases. In addition, the brand, known for its upscale, girly, contemporary clothes, opened a glitzy flagship on Fifth Avenue and 52nd Street.
“People prefer the big store on Fifth Avenue, which is doing extremely well,” Huber said. “The Madison location became a neighborhood store, not a high-traffic store. It was never extremely strong for us. It’s important to have a store on Madison. It’s prestigious, but $2 million [in rent] is too high. Our average transaction is not as high as our neighbors.”
Huber said the Madison Avenue closing is “an exception” to the company’s strategy of opening stores. The location is being marketed by Juicy Couture and its brokers.
“We are disappointed to hear about Juicy Couture,” said Matthew Bauer, president of the Madison Avenue Business Improvement District. Although Juicy has declining traffic, Bauer said based on what he’s heard from retailers, pedestrian traffic in May was higher than a year ago, while June seemed flat. “Pedestrian figures I think are stabilizing,” he said.