NEW YORK--Galeries Lafayette, which has been struggling for business since it opened on 57th Street in September 1991, might vacate the Trump Tower site before the end of the year, sources said Wednesday.
The store, Galeries' only unit in the U.S., is said to be close to signing a $35 million deal with Donald Trump to get out of its lease.
But the store's president denied the report.
"It's not true," stated George
Graf on Wednesday. "I would have to sign the deal. Nothing can be negotiated to any extent without my involvement. I have not signed a deal nor has the Galeries organization signed a deal to get out." It's possible, however, that Trump has discussed the matter with executives from the Paris headquarters of the Galeries Lafayette chain.
Officials at the Trump Organization could not be reached for comment Wednesday.
Speculation is that Trump might announce a new tenant for the 80,000-square-foot site around the end of August, and further, that Trump's top choice is Nike, sources said. As reported in these columns, Nike has been wooed by Trump for some time, although talks have been held with other prospective tenants, including Reebok and The Walt Disney Co.
Trump executives reportedly have also approached Nordstrom, although executives at the Seattle-based chain have in the past expressed reluctance about opening a store in Manhattan and are not likely to pay the high rent that the space commands.
In addition, Galeries occupies 80,000 square feet, with only about half of that currently used for selling. Nordstrom stores are generally much larger.
There's also been some speculation that Christie's has been contacted, but the auction house has been renovating and expanding its current location, 502 Park Ave., near 59th Street.
In any case, Trump shouldn't have difficulty attracting a marquee name to the site, even though the rent is high--$8 million annually for Galeries, and probably around $10 million for the next tenant.
Such prestigious retailers as Bergdorf Goodman, Tiffany's, Warner Bros. and Barneys New York bring crowds to the area, and Trump Tower has been undergoing a resurgence. New tenants, notably Tower Records and Ferragamo, both of which opened in June, have raised business prospects. Tower Records reportedly is projecting $7 million in first-year sales.
Bonwit Teller preceded Galeries in the Trump Tower site and also had difficulties. Both stores have been criticized for merchandise that couldn't compete with stores in the vicinity and for difficult store layouts, as well as not drawing enough shoppers.
Galeries executives acknowledged this year that if the store didn't turn around within a few seasons, it would pack up and leave, long before the lease expires in 2008.
In 1993, the store had an operating loss of $4.4 million.
A new tenant could do better by creating a dramatic facade on 57th Street to lure the crowds that seem more evident on the north side of the thoroughfare, around Chanel and the Four Seasons Hotel, and a little east, at Fifth Avenue, near Tiffany's.
Graf, however, sounds far from ready to bail out of the site, although he reiterated Wednesday that he'd like to sublease 5,000 square feet.
For fall, he said, the store is moving away from career apparel and focusing on "young, fashion-forward merchandise for weekend and toned-downed office attire from Europe that is not found in New York."
Within the last year, the store has been marketing to the tourist business, which represents 35 percent of its volume, through concierge programs, and through advertising on bus shelters.
It also added a home furnishings department on the fifth floor, relocated coats and swimwear, added a small bistro on the lower level, and a Clarins spa.
Certain designer lines, including Corinne Cobson, and Chantal Thomass, are being dropped this season because, Graf said, "they're good lines that don't fit in with the strategy."

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