Businesses have scaled back operations in China

Jan 30, 2020

Global businesses operating in China are closing stores, scaling back operations and restricting travel as the Chinese government races to control the coronavirus that has now infected more people than severe acute respiratory syndrome, or SARS, did in the country nearly two decades ago.

Source: The Wall Street Journal
Photo:  Tech in China

Starbucks Inc. has closed more than half of its roughly 4,300 stores in China—its second-largest market—and warned the move would weigh on financial results. The closures could lower profit per share by half a penny and revenue by $25 million each week the stores are closed, according to estimates from analysts at William Blair.

Yum China Holdings Inc., operator of KFC, Pizza Hut and Taco Bell stores in China, and McDonald’s Corp. also have closed stores, as have the parent company of retailer H&M and the Ingka Group, which operates IKEA stores. Apple Inc. has reduced store operating hours in China.

Mondelez International Inc., the maker of Oreo cookies and Cadbury chocolate, expects lower sales as a result of the outbreak. The Lunar New Year season is typically a lucrative time for candy and snack makers in China. “We expect less buying by the consumer,” Chief Executive Dirk Van de Put said. He said two factories near the epicenter of the outbreak will remain closed for another week at the request of local officials.

Walmart Inc. had been asked by the government to keep its stores in China open, a person familiar with the matter said Friday. The retail giant had 443 stores in the country as of Jan. 31 of last year, according to a securities filing. A spokeswoman didn’t respond to a request for comment Wednesday.

Jon Moeller, finance chief for Procter & Gamble Co., said the outbreak could affect consumers well beyond China. “It can also affect consumer confidence in large parts of the market,” he said.

Bernard Arnault, the chief executive and controlling shareholder of Paris-based LVMH Moët Hennessy Louis Vuitton SE, said he has asked his teams in China about the impact of the outbreak. Chinese shoppers are the luxury industry’s most important clientele, representing more than a third of global sales, according to consulting firm Bain & Co.

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