VF Corp, the American footwear and apparel group, has announced the temporary closure of around 60% of its owned and partner-operated stores in China as a result of the ongoing coronavirus outbreak. The company stated that the closures comply with local government guidelines and are aimed at prioritizing the health and safety of VF’s associates. The remaining stores that are still open are experiencing a significant decline in foot traffic, compounding the impact of the temporary closures.

In fiscal 2019, China accounted for 6% of VF Corp’s total revenue, while the broader Asia Pacific region contributed 12%. The company also revealed that approximately 16% of its total cost of goods is directly sourced from mainland China, with 7% of that going to the US market. VF Corp admitted that it did not anticipate the consequences of the coronavirus outbreak when it issued its adjusted outlook for fiscal 2020 last month. The company is anticipated to provide further updates on the operational and financial ramifications of the health crisis during its fourth-quarter conference call in May.

Despite the challenges posed by the coronavirus situation, VF’s chairman, president, and CEO, Steve Rendle, remains confident in the company’s ability to navigate through the crisis, emphasizing the strong growth prospects in China and the Asia Pacific region. However, the outbreak has already disrupted global trade and supply chains, leading to temporary store closures by other well-known companies such as Burberry, Nike, Adidas, Skechers, and Tapestry. These closures are likely to result in significant revenue losses. In response to VF Corp’s announcement, the company’s shares fell 1.9% in premarket trading.

With the number of confirmed coronavirus cases in China exceeding 30,000 and the death toll surpassing 600, the implications of the outbreak on the global economy and various industries remain uncertain. Companies across different sectors are closely monitoring the situation and implementing necessary measures to safeguard their employees and mitigate financial losses.

Useful links:
World Health Organization: Novel Coronavirus (2019-nCoV) Situation Report
Centers for Disease Control and Prevention: Coronavirus Disease 2019 (COVID-19)