If you’re wondering how bad is the market impacted from Corona virus, then Nike can tell you how bad they are impacted!
There is a new statement released by Nike indicates that the coronavirus outbreak — particularly in China — resulted in a $17 billion USD depreciation in market value. Because of the virus, the sportswear giant has been forced to shut down almost half of all its stores in the country, and those that were still open operated at reduced hours. Of course, foot traffic has also been significantly reduced due to health concerns and people feeling reluctant to go outside, further affecting Nike’s sales. Most significantly, however, is the fact that the affected market is Greater China, a new report from Forbes explains why.
Just when you think it’s only China impacted then you’re wrong. According to the financial publication, China is the company’s fastest-growing and most profitable region in the world, accounting for 15 percent of the total revenue and a whopping 40 percent of profits during the 2019 financial year. From 2016 to 2019, the country was responsible for more than a third of the company’s global growth, adding $2.4 billion USD in revenue to Nike at an 18 percent per annum rate, a significantly higher number than the 6.5 percent accounted for by the rest of the world.
Unsurprisingly, China is also Nike’s most profitable region for the past four years, bringing in an additional $800 million USD to the company’s total adjusted operating profits.
With the coronavirus seemingly still expanding, it is still uncertain how deep the financial issues caused by the outbreak can go.
So it’s quite massive impact from this disease! What’s your take on this?