Nike warns coronavirus will weaken China business

Nike has temporarily closed some locations in China and reduced hours for others

Nike warned the coronavirus outbreak in China will hurt sales in the country, dragging its shares lower along with those of rivals  Adidas and Puma.

Ticker Security Last Change Change %
NKE NIKE, INC. 163.79 -0.43 -0.26%

The Beaverton, Oregon-based sneaker giant has closed approximately half of its stores in the People's Republic and said the others are operating with reduced hours and experiencing weaker-than-expected traffic.

“In the short term, we expect the situation to have a material impact on our operations in Greater China,” Nike said in a statement.

CORONAVIRUS COLLATERAL DAMAGE JUST STARTING TO SPREAD

Greater China is Nike’s largest growth market. Revenue from the region grew by 20 percent year-over-year in the three months through November to $1.85 billion, marking the 22nd consecutive quarter of double-digit sales growth. Nike raked in $6.2 billion of revenue in the country during its 2019 fiscal year, which ended in May.

The apparel-maker is one of many U.S. companies temporarily closing its doors in China due to the outbreak, which has sickened more than 24,300 and killed 490, according to figures released Wednesday by China’s National Health Commission.

Adidas, based in Germany, said Wednesday it's closing a considerable number of shops in the country, too. A day earlier, the casino operators MGM Resorts International, Wynn Resorts and Las Vegas Sands were told by Macao’s government that they must close for at least two weeks.

CORONAVIRUS TO COST DISNEY THEME PARKS $175M

That came after restaurant chains McDonald’s and Starbucks temporarily shuttered some locations on the mainland and Disney announced the closure of its theme parks in Shanghai and Hong Kong. The entertainment company predicted Tuesday that keeping the Shanghai park closed for two months might trim $135 million from operating income and doing the same at Hong Kong would cost another $40 million.

American, Delta and United airlines have suspended all flights to and from the country, and cruise operators such as Royal Caribbean have canceled trips in the region.

Nike says it will provide an update on the financial impact from the coronavirus on its third-quarter earnings call, which is scheduled for March 19.

Wall Street analysts surveyed by Refinitiv are expecting Nike to report adjusted third-quarter earnings of 70 cents a share on revenue of $10.35 billion.

CLICK HERE TO READ MORE ON FOX BUSINESS

Nike shares have climbed less than 1 percent this year, underperforming the S&P 500’s 2.1 percent gain.