Apple to close all mainland China retail stores for 9 days as virus spreads

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One of Apple's Stores in China.
Apple currently operates 42 retail stores across mainland China.
Photo: Apple

Apple will close all its offices, 42 retail stores and contact centers across the Chinese mainland through February 9 as the outbreak of the new coronavirus has sickened more than 14,500 and killed more than 300 people.

Reuters first reported the news early Saturday, which Apple confirmed in a media statement obtained by Cult of Mac.

The company said the decision was made “out of an abundance of caution and based on the latest advice from leading health experts.

“Our thoughts are with the people most immediately affected by the Coronavirus and with those working around the clock to study and contain it,” the statement said.

The tech giant said it looked forward to re-opening stores “as soon as possible,” but gave no firm date to re-start operations in the country. Apple also said it’s online store in China would remain in operation.

A company spokesperson did not respond to additional questions from Cult of Mac on how the outbreak is impacting its business.

China, Apple and coronavirus…caution & concern

Earlier this week, Apple closed three stores in China due to concerns about the spread of the virus.

In an earnings call last Tuesday, Apple CEO Tim Cook said the outbreak had affected customer traffic to its 42 retail stores on the mainland, which Apple has been deep cleaning out of caution.

Cook said the company was limiting travel to the country in the wake of the viral outbreak. Several major companies including General Motors, Google, Wells Fargo, Goldman Sachs, JP Morgan, Facebook and Microsoft have also curtailed employees travel to and from China.

He also said it was working out mitigation plans to deal with possible production loss from its suppliers in Wuhan. The city where the virus outbreak originated is home to several Apple suppliers.

Apple relies on China for about a fifth of total sales and directly employs about 10,000 people across the country, the company has previously stated.

Cook said Apple took the potential effects of coronavirus on sales into account in its revenue guidance for the current quarter, providing a wider-than-usual range of between $63 billion and $67 billion.

“You can see from the range that [it] anticipates some level of issues there,” Cook told CNBC on Tuesday. “Otherwise we would not have a $4 billion range.”

Analyst reaction? Minimal impact, for now

Apple analyst Gene Munster is not immediately concerned the new coronavirus will have a long-lasting impact on Apple’s bottom line. In a report released Saturday and obtained by Cult of Mac, Munster that the financial impact of the store closings will be softened “because the store closings overlap with the back half of the Chinese new year (January 25th – February 8th).

“Setting aside the human impact, the financial impact on Apple’s business is fractional,” he commented. “We estimate these closings will have a negative $100 million impact on revenue in the March 2020 quarter or just under 1% of greater China revenue.”

Munster cautioned that investor psychology may be more materially affected in the near term.

“Given [the] closings could stoke investor concern…the scope of the Coronavirus impact on Apple’s business is unknown.”

The economic impact of the virus outbreak on China is starting to add up. The China-based Caixin media group reports that economists estimate more than $144 billion in losses to the restaurant, tourism and movie industries alone in seven days of the Lunar New Year holiday.

The retail shutdown

A number of other large retailers, including Starbucks, Ikea, H&M, and McDonald’s, have temporarily shuttered all or some of their doors in an abundance of caution. Starbucks has now closed more than half of its 4,100 stores in mainland China. Disney has shut down its Shanghai and Hong Kong theme parks.

Delta, American, United, Lufthansa, Air Canada, and British Airways have temporarily canceled all mainland China flights in response to the new coronavirus outbreak, under pressure from unions representing airline employees and new warnings from public health officials.