Fashion is still holding its breath, trying to gauge the full impact of the coronavirus.
On Wednesday, the order of the day seemed to be to acknowledge the disruption that has followed the outbreak — which has shuttered stores and tied up supply chains — keep the focus on protecting employees and postpone events where necessary.
PVH Corp. said the majority of its owned and franchised Calvin Klein and Tommy Hilfiger stores in China were now temporarily closed. Kering chief executive officer and chairman François-Henri Pinault said it was “impossible at this time to fully evaluate” the outbreak’s impact and Burberry postponed its show in Shanghai, scheduled for April 23.
Burberry had planned to take its fall 2020 show to China, and to showcase some new looks that were to be exclusive to the region. The brand said it was too soon to confirm a new date for the event.
Other major events have been canceled outright. Organizers pulled the plug on the tech-focused Mobile World Congress set to be held in Barcelona this month given coronavirus complications.
One of the biggest questions for businesses that rely on China is just when the outbreak will subside and life can return to normal. Some companies are slowly coming back after the extended Lunar New Year, but millions of people remain isolated.
“We are hearing lots of different theories on the speed and shape of the rebound, but the reality is that it is too early to predict,” Pinault said.
For now, businesses is at a virtual standstill for many.
PVH said the Calvin Klein and Tommy Hilfiger stores that are open are working on a truncated schedule and “experiencing significantly lower than planned traffic and sales trends.”
“Our priority is the well-being of our associates and business partners, their families and local communities, and our hearts are with those that have been impacted by the coronavirus,” said Emanuel Chirico, chairman and ceo of PVH. “I want to sincerely thank our dedicated associates in Asia who are going above and beyond, with many working remotely from home, to drive our business forward.”
Last year, Greater China accounted for about 7 percent of the company’s revenues while the whole Asia-Pacific region made up approximately 16 percent of the top line.
But sales are only part of the equation as China is also an important production hub with many cut and sew factories, but also raw material producers and component-makers.
Roughly one-fifth of the company’s goods are delivered from China — and about half of those deliveries are bound for the U.S.
Given that the early part of the coronavirus outbreak only impacted the last two weeks of PVH’s fiscal year, the company reaffirmed its adjusted guidance for fourth-quarter adjusted earnings per share of $1.79. Without the virus, PVH said it believes it would have topped estimates.
On a net basis, the company said its earnings would also take a hit from an actuarial loss tied to its retirement plans as well as other previously revealed items, including the $105 million charge to restructure the Calvin Klein business, laid out just over a year ago.
“While the coronavirus will impact our businesses in the near-term, our long-term growth opportunities across the Asia-Pacific region are significant,” Chirico said. “Given our diversified, global business model and the strength of our iconic brands, we are well-positioned to manage this period of uncertainty.”