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Lululemon Among Companies Hardest Hit By Coronavirus in China

Calvin Klein. Tommy Hilfiger. Nike, Adidas, Burberry, and Ralph Lauren -- these are just a few of the apparel and footwear brands that have reported closing many, and in some cases, most of their stores in China in response to the coronavirus known now as COVID-19.

And now you can add lululemon athletica (NASDAQ: LULU) to the list.

Image source: Getty Images.

This morning in an update on its operations in China, where it operates 38 retail outlets, yogawear specialist lululemon announced that the "majority" of its stores in China not only are now closed, but in fact have been closed since February 3, 2020, and others of its stores are operating on a reduced schedule. (The latter, perhaps a result of reduced foot traffic among wary shoppers).

At last report, global coronavirus infections had topped 76,700, with 98.3% of reported cases occurring within mainland China.

Long term, lulu CEO Calvin McDonald says, "despite the current disruption to our growing business in China, we remain confident in the long-term opportunities this market holds for lululemon." But lululemon may not be out of the woods yet. Data from statista.com shows that China has been one of Lulu's hottest markets for retail expansion, with store openings growing 1,167% over the past four years, from just 3 stores operating in 2016, to 38 today.

It stands to reason that a goodly portion of the 60% sales growth Lulu has enjoyed over that period came from China -- and with the "majority" of those Chinese stores now closed, that growth is going to disappear, at least temporarily.

As of 2:30 p.m. EST, lululemon stock is down 3.5% today.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.


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