The coronavirus outbreak has become a major concern for fashion brands such as Adidas (OTCMKTS:ADDDF), Nike Inc. (NYSE:NKE), and Capri Holdings (NYSE:CPRI) which owns Michael Kors, Jimmy Choo, and Versace. The companies have warned that sales could slow as the virus spreads.
Companies concerned about the impact of coronavirus outbreak on sales
This comes as some companies begin shutting their stores in the country to curb the spread. So far, Nike and Adidas have temporarily shuttered their outlets in China with Capri Holdings, indicating that due to the public health emergency in China, it is likely to lose $100 million this quarter.
Capri Holding CEO John Ido stated that following the outbreak in china, the measures put in place to prevent the spread of the virus are likely to have a material impact on the company’s business. Capri has so far shut around 150 of its 225 stores in mainland China.
Similarly, other fashion companies such as Nike have closed almost half of its stores in China, with Adidas also shutting a significant number of its outlets. According to Nike and Capri, the stores that they have not closed are only operating with fewer hours, and the number of shoppers has dropped.
China an important market for fashion companies
In a statement, Nike indicated that it was shuttering half of its stores as it prioritizes the safety and health of its partners and teammates. Nike CEO and President John Donahoe stated that despite the challenging situation in China, the company’s long-term desire to continue serving consumers in China is still strong. For Nike, China is an important market, and in the last quarter, it accounted for $1.68 billion of the company’s $10.66 billion revenue.
Adidas has over 12,000 outlets in China, whereby 500 of those are company-owned. The company indicated that it is early to assess the impact of the virus on its sales for now. For Adidas, China is equally an important growth driver, and in the last quarter ended September 30, 2019, sales jumped 11%.