Ralph Lauren Shuts Half of Stores in China Over Virus Outbreak

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(Bloomberg) -- Ralph Lauren Corp. has temporarily closed about half of its 110 stores in China as nations struggle to contain the coronavirus outbreak.

Chief Executive Officer Patrice Louvet provided a snapshot of the fashion label’s state in China in an interview and on a call with analysts Tuesday morning. Less than 4% of Ralph Lauren’s business comes from China, Louvet said, which translates to about $250 million in sales last fiscal year.

“We are working on being as agile as possible,” Louvet said. “And we’ll make sure we make the best of the situation that we’re dealing with.“

Ralph Lauren has limited travel in China to protect its employees. It has corporate offices in Shanghai and Hong Kong that oversee stores across the country, including two in Wuhan, the center of the outbreak. Louvet said it doesn’t work with any production facilities in the stricken region.

Though dozens of stores have shut their doors, some Chinese shoppers are still buying online. Ralph Lauren says it hasn’t yet seen an impact on e-commerce spending in China. Luxury brands rely on online sales to access smaller cities in China where they don’t have physical stores.

Like other leaders of companies that have business in China, Louvet is seeking ways to mitigate the impact from the U.S.-China trade war, eight months of anti-government protests in Hong Kong, and now the coronavirus, which has stifled travel and commerce throughout the country. Ralph Lauren’s same-store sales in Asia fell 1% last quarter, prior to the outbreak, even as worldwide sales rose 2%.

Over the past several years, Ralph Lauren has moved to diversify its supply chain by relocating production to other countries, so that it’s not too reliant on any one locale. Louvet said it’s too soon to gauge any long-term impact on the supply chain caused by the epidemic. Factory workers are now in the middle of an extended Lunar New Year vacation and the company is closely monitoring the situation.

“We can’t lose sight of the human dimension of all this,” Louvet said. “We follow very closely the guidance both from the local and the global authorities on this health crisis.”

©2020 Bloomberg L.P.

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