Tax whacks
Luxury sales wane as taxes bite high-income Americans
High-end retailers say their highearning clientele is turning frugal in response to higher taxes this year.
NEW YORK — High-income Americans are turning frugal.
The Standard & Poor’s 500 Index is up almost 19 percent since Nov. 15, the longest streak since 2009. In the past, stockmarket gains have led to accelerated sales at retailers, including Saks and Nordstrom, catering to shoppers who earn more than $100,000, said Liz Dunn, an analyst for Macquarie Group in New York.
That relationship is less evident now, with these companies describing a weakening sales environment as customers grapple with higher taxes, says Dunn.
“For the most part, we’ve been in static tax environment for a few years, and now that’s changing,” she said. “That’s the factor that has really changed for luxury retailers.”
Seattle-based Nordstrom reported earnings and revenue on May 16 that missed analysts’ consensus estimates for the period ended May 4 and lowered its full-year sales forecast.
Tiffany & Co. experienced “somewhat softer” than anticipated sales in the Americas during the three months ended April 30, said Mark Aaron, vice president of investor relations.
Some categories of consumer spending now are holding up better than luxury retail, said Dan Popowics, a portfolio manager in Cincinnati for Fifth Third Asset Management, which oversees $6.6 billion. Comparable-store sales for TJX Cos.’s HomeGoods business rose 7 percent in the quarter ended May 4, reflecting consumption that’s “more of a need than a want,” he said.
Wealthy Americans face obligations on top of the payroll tax increase that hit all wage earners this year after Congress and President Barack Obama let the tax that funds Social Security benefits revert to 6.2 percent from 4.2 percent.
Also starting this year are a new 0.9 percent surtax on wages and 3.8 percent added tax on investment income for individuals making more than $200,000 and couples making more than $250,000. Additionally, Congress set the top income-tax rate at 39.6 percent for taxable income above $400,000 for individuals and $450,000 for couples, compared with 35 percent last year.
Memphis- based air charter operator Southern Airways Express launched its first scheduled trip from Olive Branch Airport Thursday afternoon.
A nine-passenger Cessna Caravan C208A departed Olive Branch at 4:32 p.m. on a 117-minute flight to Destin, Fla.’s Coleman Kelly Field. The return trip from Destin to Olive Branch was scheduled for Thursday night.
The privately held Southern Airways Corp. received U.S. Department of Transportation certification earlier this week to provide scheduled flights linking Greater Memphis, Oxford, Destin, Panama City, Gulf Shores and New Orleans. The company’s application listed 508 flights between June 1 and Sept. 3.
Led by CEO Stan Little, a Hernando attorney, the company is attempting to carve out a niche carrying passengers between Memphis and popular leisure destinations, using small turboprops and flying out of small airports.
The company’s reservation website at iflysouthern.com wasn’t running yet, but Peacock Travel Group is handling bookings at 1-800-329- 0485. $500,000 worth of buffet food will be given to registered patrons during the four-day event, which begins June 10.
Gold Strike said it has finished an $8 million renovation. Earlier, Harrah’s, Horseshoe and Tunica Roadhouse rolled out $1 million weekend giveaways.