A year ago today, the opening of a lavish new Tiffany & Co. on Wall Street was literally accompanied by fanfare—as well as champagne, models clad in the jeweler's trademark blue, and gift bags containing sterling silver Tiffany Wall Street key chains.

The Dow Jones industrial average was soaring toward 14,000, and the Fifth Avenue stalwart wanted a jolt of Wall Street excitement and some more of those big bonus bucks. The time seemed ripe to join Hickey Freeman and other luxury stores that were sprouting in what had been an upscale retail vacuum.
 
Tiffany enlisted Louis Vuitton boutique veteran Yabu Pushelberg to redo an 11,000-square foot space in a former bank building at 37 Wall Street. Since the store had to be ready in time for the holiday season, when retailers ring up most of their profit for the year, crews worked double shifts for weeks, installing imported marble steps and floating walls made of museum-quality glass. The cost: More than $20 million, according to sources with knowledge of the project.

"It was expensive," a Tiffany spokesman admits.

In the past few years, Tiffany and tony cohorts such as Thomas Pink, Canali, and Tumi bet big on what they thought was a hot new growth market. Wall Street was flusher than ever, tourists were flocking to the area, upscale residential developments had brought in new local spenders, and the World Trade Center site was being rebuilt.

But the new Tiffany is marking its first anniversary in the midst of a financial meltdown that threatens to take down Wall Street's retail renaissance. A global economic crunch is choking the wallets of financiers and tourists, and delaying the W.T.C. rebuild yet again. Brokers say new deals, including Apple's long-rumored interest in 23 Wall Street, are being called off or put on hold. Sales are already softening at downtown boutiques just as the all-important holiday shopping season gets underway, and the outlook is grim.

"The retail establishments who opened recently on Wall Street in an attempt to take advantage of the growth and resurgence there are in deep trouble," said Harry Bernard, co-founder of San Francisco-based fashion industry marketing and consulting firm Colton Bernard.

The financial district's luxury pioneers took on exceptional risks by betting big on downtown Manhattan's fate. The benchmark cost for a store to really wow Wall Streeters ranges as high as $2,000 to $3,000 per square foot. Thomas Pink spent in that range on its space at 63 Wall Street, according to sources, and Hermès may have spent even more. Retailers don't shell out that kind of money unless they have locked in a long-term lease, like the 20-year deal Tiffany inked. An investment of that size, though, means less flexibility to exit a struggling store.

Tiffany not only spent far more than its customary $600 to $900 per square foot rate for build outs, according to a source close to the company. It also built a far larger store than the 5,000- to 6,000-square-foot spaces the jeweler has favored over the last seven years. This year the company has backed off big showplaces even further, stating in Securities and Exchange Commission filings that it plans to focus on 2,000-square-foot shops.

Italian luxury menswear brand Canali, meanwhile, chose to join the party just this May, launching its first New York boutique at 25 Broad Street partly because Tiffany's presence inspired confidence. The $275 million Milan-based brand had been selling $2,000 suits and even a limited-edition $15,000 suit or two until mid-September. Since the collapse of Lehman Brothers, business has tanked, too, according to Giorgio Canali, president for North American operations.

"It's a little difficult to adjust," he said. "Definitely these are not easy days: Looking at the market losing 679 points, the feeling is not that positive down there."

Tiffany and Canali trumpet the base of 310,000 workers and an estimated 50,000-strong residential population in lower Manhattan as cause for optimism over the long term. But the financial crisis hits both groups of potential shoppers, and there will be far fewer workers on Wall Street as the crisis continues. Battered firms Merrill Lynch (now part of Bank of America) and A.I.G. are among lower Manhattan's largest employers, and are likely to shed jobs and some of their combined 6.1 million square feet of neighborhood office space. These ripple effects would follow the 111,201 financial-services job cuts announced this year through September, according to data from outplacement firm Challenger Gray & Christmas.

As the Dow Jones swooned again early last week, downtown workers lined up for cheap burritos at Chipotle on Maiden Lane during lunchtime, shunning Hermès, Tumi, and Thomas Pink nearby.

A Tiffany spokesman insisted the company still believes in the financial district. More important, as the company seeks to ride out a slow time for retail in general and Wall Street stores in particular, it has some financial strength to tap. The $2.9 billion firm is profitable, with $153 million in cash on the balance sheet. Sources also said that Tiffany negotiated a bargain rent of around $110 per square foot, compared with the $250 to $300-per-square-foot prices more recent deals such as Canali likely commanded.

New stores, even those owned by large global companies, generally have a three-year time horizon to break even. Having tied their fortunes to Wall Street, top brass at these stores can only hope it recovers in time.

"Their future is a mirror image of the future of Wall Street itself," said Bernard.