Coronavirus: Levi’s shuts half its mainland China stores, expects dent to earnings
- Sales in mainland China account for about 3 per cent of Levi’s revenue, CFO Harmit Singh says
- Apparel maker opened its largest mainland China store in Wuhan in October last year
Levi Strauss & Co has shut about half of its stores in mainland China due to the outbreak of a new coronavirus and will take a near-term financial hit from the store closures, Chief Financial Officer Harmit Singh said on Thursday.
“It will put a dampener on our growth objectives in the near term,” Singh told Reuters in an interview about the store closures in China, which contributes about 3 per cent to the group’s revenue.
The flu-like virus has set-off alarm bells across the globe, with companies such as Starbucks and Tesla warning of a financial hit from slowing business in the world’s second-largest economy. Levi’s itself has also stopped all employee travel in and out of China.
Singh said the company has not taken into account the impact of coronavirus outbreak on its full year earnings forecast. It will be quantified when the company reports first quarter results in April, he said
Levi’s forecast 2020 earnings above estimates, boosted by demand for women’s apparel in its own stores and online channels. Levi’s has “hit the ground running” during the crucial holiday shopping season, Singh added.
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Its most-recent results, however, were less than encouraging. The company missed its fourth quarter revenue estimates, hurt by plunging sales at department stores and protests in Hong Kong, which dented demand in the Asian shopping hub.
Net revenue fell 1.4 per cent to US$1.57 billion in the quarter ended November 24, compared with analysts’ estimates of US$1.58 billion, according to Refinitiv data. Adjusted net income fell 9 per cent to US$108 million, or 26 cents per share, beating expectations of 21 cents.
Still, the company forecast adjusted 2020 earnings of US$1.18 to US$1.22 per share, above Wall Street estimates of US$1.17.