VF temporarily closes stores in China due to coronavirus

It is not only luxury that must adapt its retail organization in Asia . Due to the coronavirus epidemic spreading in China, the American footwear and clothing group, owner of Vans , The North Face and Timberland , has announced the closure of approximately 60% of its own stores and franchises in the country. The financial impact of this health crisis has not yet been assessed by the North Carolina-based firm.

In 2019, mainland China generated around 6% of VF's revenue - Instagram: @vans_cn

The measures taken are those recommended by local governments and VF says it strives to guarantee the "health and safety" of its employees. Group stores still operating in China are experiencing a significant drop in traffic, which will worsen the impact of temporary closings.

In fiscal 2019, VF generated revenue of $ 13.8 billion (€ 12.6 billion), of which 6% was generated by China. More generally, the Asia-Pacific region accounts for 12% of the group's revenues.

The company is currently unable to assess the impact of the coronavirus epidemic on its production chain. 16% of its goods acquisitions are made directly in mainland China, of which 7% is then sent to the American market.

According to VF's statements, the current situation in China was not taken into account in the adjusted earnings forecasts published last month for fiscal year 2020. VF then expected annual sales of $ 11.75 billion (10.73 billion euros).

Forecast results which could be revised downwards

The multinational is expected to release an update that takes into account the operational and financial impact of the coronavirus epidemic during its fourth-quarter conference call scheduled for May.

Until then, VF CEO Steve Rendle is trying to reassure shareholders: "Certainly, the coronavirus will destabilize our financial results in Asia Pacific in the short term. But VF's growth potential in China and throughout region is significant and the foundations of our activity are solid ", he argues in a press release. He added: "VF should be able to absorb the impact of the coronavirus thanks to the diversity of its activities and the good results of other important regions."

More than 40,000 people have already been infected with coronavirus in China and more than 900 have died. In addition to the health aspect, the epidemic has consequences for the economy and trade worldwide. Several international companies such as Burberry , Nike, Adidas , Skechers and Tapestry have temporarily ceased operations in China, which could lead to significant loss of income.