The Atlanta Journal-Constitution
Big business and the outbreak
Many worldwide major brands are seeing business in China suffer.
Disney. Apple. Nike. McDonald’s. Hyundai.
These companies have come to rely on China for its efficient factories, increasingly affluent consumers and years of hardcharging economic growth.
Now the coronavirus outbreak is disrupting sales, manufacturing and global supply chains.
It’s too early to assess the full financial effect of the outbreak.
Much remains unknown, including when Chinese businesses will reopen and whether the spread of the coronavirus will cause similar disruptions in other parts of the world.
But over the last few days, big companies have revealed more about how the virus has affected them:
Entertainment
■ Disney theme parks in Shanghai and Hong Kong have been shut. The closures are expected to reduce the company’s operating income by $175 million in the second quarter.
■ IMAX was forced to postpone the release of five films it had planned to showcase in China during the Lunar New Year holiday period.
■ Nintendo says shipments of its Switch game console to Japanese customers would be delayed.
■Wynn Resorts is losing $2.4 million to $2.6 million every day that its casino in Macao remains closed.
Technology
■ Apple suppliers could be disrupted and traffic to its stores in China has dropped, CEO Tim Cook told analysts in January.
■ Qualcomm reduced the low end of its earnings guidance for the next three months because of the uncertainty created by the
outbreak, CFO Akash Palkhiwala told investors. Last year, nearly half the company’s revenue came from China.
Automakers
■ Tesla, Ford and Nissan have shut down plants in China because of the virus.
■ Volkswagen and Daimler said they planned to reopen their factories in China next week if they received government authorization.
■ Hyundai said it would temporarily stop production lines at its factories in South Korea because of shortages of Chinese parts.
■ Fiat Chrysler warned that the outbreak could disrupt production at one of its European plants in the next few weeks, Reuters reported.
Food
■ McDonald’s has closed several hundred of its approximately 3,300 restaurants.
■ Starbucks has closed more than half its 4,300 stores in China and delayed a planned update to its 2020 financial forecast.
■ Yum Brands, operator of KFC and Pizza Hut franchises in China, said nearly one-third of its restaurants were closed.
Clothing and luxury
■ Nike told investors that it expects “a material impact on our operations in Greater China” where about half the company’s stores have been closed.
■ Burberry also warned investors about a “material negative effect on luxury demand.” Twenty-four of its 64 stores in China are closed.
■ Tapestry, which owns Kate Spade, Coach and Stuart Weitzman, said the outbreak could reduce its sales by up to $250 million in the second half of the year.
■ Estee Lauder warned that the outbreak would hurt its financial results “in the near term.”