The devastating coronavirus is showing no signs of abating. As of press time, the virus had claimed 1,384 lives, and more than 60,000 people have been infected. Now, the world’s economies are also beginning to feel its impact. From the watch world to the telecoms industry, global businesses have felt the full force of covid-19, and the latest to take a hit is Ralph Lauren.
Over the past week, the American fashion label has closed approximately two-thirds of its stores in mainland China and anticipates there will be a “broader impact across its businesses in China and parts of Asia due to significantly reduced travel and retail traffic.”
While nothing compares to the loss of human life, it’s now clear that the unrelenting outbreak will have a lasting impact on global supply chains and brand stability across numerous sectors.
In a statement issued on Thursday, February 13, Ralph Lauren Corp. said the coronavirus retail freeze would result in a $55 million to $70 million drop in fourth-quarter sales, plus a loss of $35 million to $45 million in operating income.
For context, the label accrued $273 million in revenue from Asia in the same period last year as a result of rapid expansion in the region: Ralph Lauren currently operates roughly 110 stores in China, including 37 which opened during the third quarter. And while the deadly virus is threatening to negatively impact this burgeoning market, Ralph Lauren’s leaders seem cautiously optimistic.
“Our dedicated teams are operating with agility in a highly dynamic situation, and we will continue to assess the implications for our business across retail, corporate and our supply base,” Patrice Louvet, president and chief executive officer, said. “While the health crisis creates near-term uncertainties, the fundamentals of our business are strong, and we continue to see significant long-term opportunities for growth in China and across Asia.”
While the projected losses are certainly substantial, it’s worth noting that China accounts for less than 4 percent of Ralph Lauren’s overall business, which is relatively low compared to most of the other high-end houses.