Adidas is the latest brand to announce precautionary measures in the face of China’s coronavirus outbreak. On Wednesday, the company said it is temporarily closing a “considerable” number of stores throughout the country.
While the German sportswear company said it was “too early to assess the magnitude” of the effect the closures will have on its business, other brands have begun to release estimates. Also on Wednesday, Capri Holdings — parent company to Michael Kors, Versace, and Jimmy Choo — said it expects to lose $100 million this quarter due to the public health emergency, which has so far killed nearly 500 people and sickened more than 24,500, mainly in China.
With tens of millions of Chinese residents on lockdown and air travel in and out of the country largely suspended, business has slowed to a trickle in many cities. Capri Holdings said it has closed 150 of its 225 stores in mainland China; the remainder are operating with reduced hours and “significant declines in customer traffic.” The company also cautioned that the impact could worsen if the situation becomes more severe and Chinese tourism is further restricted.
As for Adidas, the brand has around 12,000 stores in China, 500 of which are company-owned. The region has driven significant growth for the brand this year, with sales jumping 11% in the three-month period ended Sept. 30 and 14% in the second quarter.
Rival Nike said on Tuesday that it was temporarily closing about half of its stores in China, adding in a statement that it is “prioritizing the health and safety of our teammates and partners” and reducing hours at the stores that remain open.
“First and foremost, our thoughts are with the people affected, and we remain focused on the health and safety of our teammates and partners,” Nike Inc. president and CEO John Donahoe said in a statement. “Despite this difficult situation, Nike’s long-term opportunity to continue to serve consumers in Greater China with inspiration and innovation remains exceedingly strong. At the same time, we continue to have extraordinary brand and business momentum in all other geographies.”
Greater China accounted for $1.68 billion of Nike’s $10.66 billion in revenue last quarter, with sales in the region growing 22% year over year.