NIKE Inc. (NKE - Free Report) is among the companies to have announced the closure of all its company-owned stores in multiple countries around the world, including those in the United States, Canada, Western Europe, Australia and New Zealand, from Mar 16 to Mar 27 to play its part in containing the spread of coronavirus (COVID-19). The announcement came after President Donald Trump declared a national emergency on Mar 13 to help combat further spread of coronavirus.
The declaration frees up to $50 billion of dollars in federal funds for emergency relief operations. It also eases regulations on the provision of healthcare and could speed up testing. The President also urged every state to set up emergency operation centers, effective immediately, and every hospital in the country to activate its emergency plan. Several US states have taken measures to reduce the infection rate, including banning large gatherings, sporting events and closing schools.
Later on, the Federal Reserve lowered its benchmark interest rates to nearly zero on Mar 15 and launched a massive $700-billion quantitative easing program to shield the economy from the effects of the virus outbreak. The new fed funds rate will now be targeted at 0-0.25%, down from the previous target of 1-1.25%. The quantitative easing program will include the purchase of $500 billion worth of Treasurys and $200 billion of agency-backed mortgage securities.
Coming back to NIKE, the company revealed that other Nike-managed facilities will offer the option to work from home and flexible work schedules. Further, it is taking steps to contain the spread of the deadly virus among its team members, which include social distancing, and other safety and cleaning measures. Nevertheless, the company stated that customers can still make purchases through its online shopping site — nike.com — and the Nike app.
Furthermore, the Nike-owned stores in South Korea, Japan, most of China and many other countries will remain open and continue to operate normally.
In February, it temporarily closed nearly half of company-owned stores in Greater China in response to the coronavirus outbreak. Consequently, this Zacks Rank #3 (Hold) company expected China operations to witness softness in the near term, which should have a pronounced impact on overall results. Further, the company stated that the current situation was not accounted for in its fiscal 2020 guidance that was provided during the announcement of second-quarter fiscal 2020 results.
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Driven by the COVID-19 outbreak, stocks of all sporting goods and other retailers have been jittery lately. Shares of NIKE have lost 25.4% year to date compared with the industry’s decline of 26.6%.
Along with Nike, many companies closed stores in the United States and other countries to combat the spread of coronavirus. NIKE’s close competitor and yoga apparel maker, lululemon (LULU - Free Report) , announced the closure of all stores in North America and Europe from Mar 16 through Mar 27, while keeping its online site active.
Moreover, Under Armour (UAA - Free Report) closed all stores in North America from Mar 16 through Mar 28, 2020, safeguarding the health of its employees and customers.
Further, Abercrombie (ANF - Free Report) is likely to temporarily close all stores across its brands from Mar 15 in North America and Mar 16 in EMEA until Mar 28, 2020. However, its stores in the APAC and online stores in all regions will remain open. Despite expecting significant adverse impacts, Abercrombie withdrew the first-quarter and fiscal 2020 outlook issued on Mar 4, 2020.
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