Tiffany & Co (TIF) is renewing its vows to its flagship store.
The jeweler said Tuesday it would undertake a three-year renovation of its store on Manhattan’s Fifth Avenue at 57th Street, a location made iconic by the classic movie Breakfast at Tiffany’s. While Tiffany did give a dollar amount estimate for the project, it said the work would add the equivalent of 1% to 2% of worldwide sales over three years, or roughly $125 million to $250 million based on last year’s revenues without factoring sales growth.
While the store’s relative importance as a source of direct sales has fallen, generating less than 10% of its $4.2 billion in sales as Tiffany has expanded its footprint over the years, the flagship remains the focal point of Tiffany’s brand identity. The company recently transformed its fourth floor into one of the most popular restaurants in town. For the recent launch of its Paper Flowers collection—its biggest in years—Tiffany installed a massive greenhouse in the center of the ground floor and hosted an event attended by celebrities like Kendall Jenner.
“The newly reimagined flagship will serve as the modern crown jewel of our global store network,” said Tiffany CEO Alessandro Bogliolo in a statement.
The 10-floor store was opened in 1940. During renovations, Tiffany will expand its retail space in a location at 6 East 57th Street.
It’s not unusual for flagships to take a disproportionate percentage of a retailer’s capital expenditure budget given how central they are to a brand’s image. A few years ago, Macy’s (M)undertook a $400 million multi-year renovation of its 1 million square foot flagship in Manhattan’s Herald Square.
In its most recent quarter, Tiffany enjoyed results that suggest it is getting back on track after a difficult period that saw some turnover in the c-suite. In its first fiscal quarter of 2018, same-store sales in the first fiscal quarter rose 7%, smashing expectations for 2.6% growth, according to Consensus Metrix. Tiffany & Co is expected to report second-quarter numbers on August 28th.
