A growing number of retailers have announced they are temporarily closing stores in an effort to prevent the spread of coronavirus.
Nike (NKE), Urban Outfitters (URBN), Abercrombie & Fitch and more have announced that they are shuttering many or all of their retail stores around the globe through late March because of coronavirus. They followed makeup brand Glossier and outdoor brand Patagonia, which on Thursday and Friday were among the first consumer goods retailers to announce temporary store closures.
The companies all stressed that their online stores would remain open, though some, including Patagonia, have said shipments could be delayed as employees work remotely.
Apple (AAPL) last month closed retail locations in China during the peak of the outbreak there. On Friday, the company said that while its China locations had reopened, it was closing stores in all other areas of the world.
President Donald Trump declared a national emergency over the coronavirus on Friday. As of Saturday, nearly 3,000 coronavirus cases had been reported in the United States, while more than 152,000 cases have been reported globally. Health experts have encouraged people to respond by practicing “social distancing,” which includes avoiding large gatherings and maintaining a physical distance of about six feet from other people.
“What we’ve learned together (in China) has helped us all develop the best practices that are assisting enormously in our global response,” Apple said in a statement Friday. “One of those lessons is that the most effective way to minimize risk of the virus’s transmission is to reduce density and maximize social distance. As rates of new infections continue to grow in other places, we’re taking additional steps to protect our team members and customers.”
Many retailers have also closed offices and asked employees who work in other parts of the business to work from home.
Some of the largest grocery chains in the United States -— including Kroger (KR), Publix and Walmart — have also announced reduced store hours in response to the outbreak.
Similarly, Starbucks (SBUX) said Sunday it is moving to a “to-go” model, pausing all in-store seating and encouraging the use of its app to order ahead, at most company owned stores in the United States and Canada for at least two weeks.
What will the closures mean?
Retailers’ sales are likely to take a hit from the closures.
Nike, for example, has more than 1,100 branded stores globally and nearly all of the company’s growth last year came from direct to consumer sales at its Nike retail stores, factory outlets and Nike.com, according to NPD analyst Matt Powell.
Powell said that while “some of the closed store sales could be realized in Nike’s wholesale partners and on Nike.com,” Nike will likely “see a negative sales impact from these closures.”
But while retailers may suffer financially in the short term, the closures are a smart long term business decision, said Susquehanna International Group senior analyst Sam Poser.
“It’s an unfortunate but very necessary decision,” Poser said.
“How important are a few days of business versus the health of your people, the health of your employees and customers, and your brand reputation? … You want to be around and strong, with your people and your customers, when the dust settles.”
The situation is similar for Apple, which had already been feeling the negative impact of stores in China that closed last month and only just reopened, as well as supply chain issues caused by the outbreak in China.
“At this point, the March quarter is going to be an iPhone (sales) number that’s as doomsday as you could imagine … At this point, investors have accepted that the March quarter is really a write off,” said Wedbush analyst Dan Ives.
However, Ives said, as a “global brand” and “business leader,” it is essential for Apple to prioritize the health of its employees and customers above short term profits. And the 5G iPhone on the horizon should help the company bounce back in the coming year.
Retailers with a smaller brick-and-mortar footprint, like Everlane, have also closed physical stores until late March. Here’s a roundup of some of the larger brands.
Retailers that have announced store closures:
Glossier:
- All stores closed as of March 12, for at least the next two weeks.
- Hourly employees will continue to receive their regular pay for the two week scheduled closure.
- The company has also delayed the opening of its new Arizona store, which was scheduled for this upcoming Wednesday.
Patagonia:
- All stores closed as of March 13. The company said it will reassess the situation and post an update on March 27.
- Hourly employees will continue to receive their regular pay.
Neighborhood Goods:
- All stores closed as of March 13, through at least March 27.
- Hourly employees will continue to receive their regular pay.
Urban Outfitters:
- All stores globally closed as of March 14, through at least March 28.
- Hourly employees will continue to receive their regular pay.
- Includes the company’s other brands: Anthropologie, BHLDN, Free People, Terrain and Nuuly.
Apple:
- All stores outside of the Greater China region closed as of March 14, through March 27.
- Hourly employees will continue to receive their regular pay.
- Stores in Greater China have reopened.
Nike:
- All stores in the United States, Canada, Western Europe, Australia and New Zealand will be closed March 16 through March 27.
- Stores in South Korea, Japan, most of China and many other countries remain open.
- Hourly employees affected by store closures will continue to receive their regular pay.
Abercrombie & Fitch:
- All stores outside of the Asia Pacific region will be closed through March 28. Store closures in North America will begin March 15. Store closures in Europe, the Middle East and Africa will begin March 16.
- Includes the company’s other brand Hollister Co.
- Hourly employees will continue to receive their regular pay.
- The company also withdrew its first quarter and full year 2020 guidance on Sunday due to the uncertainty caused by coronavirus.
Lush Cosmetics:
- All 258 retail stores across the United States and Canada will be closed from March 16 through March 29. Corporate employees at Lush’s headquarters in North America are also being asked to work from home if their jobs allow through the end of the month.
- Hourly employees will continue to receive their regular pay.
- The company said it will also be forced to “significantly scale down our manufacturing and distribution operations” for the duration of the store closures.
Starbucks:
- Instituting a “to-go” model in most company owned stores in the United States and Canada for at least two weeks. That means cafe and patio seating areas will be closed, though customers can still order at the counter, through the app and via the drive through. Stores will have modified condiment bars.
- Some stores in busy areas, such as university campuses, will be closed, and stores in areas with high concentrations of coronavirus cases will be closed or have reduced hours.
REI:
- Closing all 162 stores in the United States from March 16 through March 27.
- Hourly employees will continue to receive their regular pay.
- Offering free shipping on all online orders.
Lululemon:
- Closing all stores in North America and Europe from March 16 through March 27.
- Hourly employees will continue to receive their regular pay.
