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Nike Says Coronavirus to Have ‘Material Impact’ on China Operations

Nike says about half of its stores in China have been closed and others are operating with reduced hours and seeing lower-than-planned retail traffic.
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Nike  (NKE) - Get Free Report said Tuesday it expects the effects of the ongoing coronavirus outbreak to have a “material impact” on its operations in China.

The company said about half of its stores in China have been closed temporarily. Its remaining stores in China are operating at reduced hours and seeing “lower than planned retail traffic,” the company said in a statement.

"In the short term, we expect the situation to have a material impact on our operations in Greater China. However, NIKE’s brand and business momentum with the Chinese consumer remains strong," the company said in the statement.

Nike shares fell $1.13 or 1.11% to $100.25 in after-hours action.

The company added that “This situation was not contemplated at the time we provided Q3 guidance during our Q2 fiscal year 2020 earnings call. Dynamics continue to evolve and accordingly we will provide an update on the operational and financial impacts on our Q3 earnings call."

Nike is expected to report adjusted net income of $1.1 billion, or 70 cents a share, on sales of $10.4 billion for the current quarter, based on a FactSet survey of 28 analysts.

In the same period a year ago, the company posted earnings of 68 cents a share on sales of $9.6 billion. It reported net income of $847 million.

The stock had fallen 1.9% since the company last reported earnings on Dec. 19.

Coronavirus fears weighed on U.S. stock markets last week, as investors fretted the fast-spreading disease would slow down global economic growth. However, stocks in the U.S. have snapped back sharply this week, with the Nasdaq closing at an all-time high Tuesday and the S&P 500 index less than 2% off its all-time closing high set last month. The Dow Jones Industrial Average has also seen strong gains.