Nov. 25 (Bloomberg) -- The foreign-tourist boom for U.S. luxury retailers may turn to a bust.

Tiffany & Co., Saks Inc., and Neiman Marcus Group Inc. may be losing the international customers that helped them weather the U.S. spending slowdown last year. The result would be “a double whammy” following the dent in U.S. consumer spending caused by the global financial crisis, said David Schick, an analyst at Stifel Nicolaus & Co. in Baltimore.

The dollar’s resurgence, as well as a drop in home and stock values outside the U.S., will discourage foreign shoppers into next year as the global financial crisis intensifies, Schick said. He estimates sales will decline 8 percent at Tiffany’s Fifth Avenue store in New York in the third and fourth quarters, versus gains of 25 percent and 10 percent a year earlier.

“You certainly have to now remove the benefit that luxury- goods companies saw from high-end travel,” Schick said.

The U.S., European and Japanese economies have fallen into recession, and the dollar has risen more than 13 percent against the currencies of six U.S. trading partners since Sept. 22. In 2007, it dropped 8.3 percent.

A 2.9 percent drop in passenger traffic on international flights in September was “alarming,” the Geneva-based International Air Transport Association said in a statement on its Web site last month.

Fifth Avenue

A 10th of Tiffany’s sales are rung up at its Fifth Avenue store. Last year, half of the sales growth at the store came from foreign tourists, Schick estimated. Tiffany spokesman Mark Aaron declined to comment before the company’s third-quarter earnings release tomorrow.

Saks’s Fifth Avenue location represents more than 20 percent of the luxury chain’s sales. Neiman Marcus’s two Bergdorf Goodman stores blocks away account for 13 percent of revenue, and had been the Dallas-based retailer’s biggest growth drivers.

Spokeswomen Julia Bentley of Saks and Ginger Reeder of Neiman Marcus declined to comment.

Tiffany fell 22 cents, or 1 percent, to $20.83 at 4:15 p.m. in New York Stock Exchange composite trading. Saks rose 6.3 percent to $3.56. Tiffany has lost 55 percent this year and Saks has dropped 83 percent.

“Clearly, the strengthening of the dollar or the weakening of the euro, depending on how you want to look at it, will affect holiday shopping patterns,” Polo Ralph Lauren Corp. President Roger Farah said on a Nov. 5 conference call. “Last year, the holiday season in key markets was distorted with traffic from international buying and I think that’s going to be moderated.”

‘Great Deal of Concern’

Those still planning to visit New York may spend less, said Kimberly Spell, senior vice president of communications and government relations of NYC & Co., the city’s convention and visitors’ bureau.

“We have a great deal of concern about our retail partners in New York City,” Spell said in a Nov. 21 interview. “Potential visitors are looking much more for an experience than focusing on spending on consumer goods.”

Hotel occupancy in New York City was 86 percent in October, compared with 92 percent in the same month of 2007, she said. In 2007, foreigners accounted for 19 percent of visitors, and 54 percent of tourist spending.

Cheaper in Scotland

Customer visits to Tiffany’s main store “could fall dramatically as the effects of a stronger dollar and weak tourism weigh heavily,” Laura Champine, an analyst with Cowen & Co. in New York, wrote in a Nov. 21 report. She recommends selling the shares.

Scottish travelers Graham Morris, 31, and Fraser Paterson, 23, said they were buying less than they had planned during their one-week trip to New York because of the stronger dollar.

“It’s surprising,” Paterson said when interviewed on Fifth Avenue on Nov. 21. “Everybody told us that it was cheaper in the U.S., but many shops are actually more expensive than in Scotland.”

Paterson, a dancer from Edinburgh, said he decided to buy a particular Gucci watch when he gets back home because it costs $300 more in New York. In Scotland, he can get it for the equivalent of $1,300, he said.

Five days in New York were as expensive as a two-week vacation in Holland would be, said Alison Turner, 24, a public health officer from Newcastle, England. If the British pound stays low, Turner said she would rather go to a European country for her next vacation.

‘Difficult’ October

Sales at Saks’s Fifth Avenue store were “only slightly better” than the rest of the company’s locations in the third quarter, Chief Executive Officer Stephen Sadove said on a Nov. 18 conference call with investors and analysts. They “meaningfully outperformed” other stores in previous periods, he said.

The New York-based retailer reported a $42.8 million loss in the quarter on a 12 percent drop in revenue. Sales at stores open at least a year also fell 12 percent.

“October was a more difficult month for this location as the financial markets worsened, news of bank failures and additional lay-offs took hold, and tourism slowed,” Sadove said.

Bergdorf Goodman’s sales declined 11 percent in the quarter ended Nov. 1. A year earlier, Bergdorf sales rose 12 percent versus a 5.4 percent gain at the Neiman Marcus namesake stores open at least 12 months. Neiman Marcus hasn’t yet reported earnings for the quarter.

“The current luxury travel trend is way different than it was nine months ago,” Stifel’s Schick said. “And in 2009 it’s going to be way worse than that.”

To contact the reporters on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net; Henry Goldman in New York City Hall at hgoldman@bloomberg.net.

Last Updated: November 25, 2008 16:56 EST