By Andrew Dowell and Tripp Mickle
Apple Inc. will close all its retail stores outside Greater
China, a dramatic example of how companies are clamping down on
business activity to slow the spread of the coronavirus to their
employees and customers.
Apple said the stores would be closed until March 27 in light of
the worsening spread of the virus, which according to figures from
Johns Hopkins University has killed 5,429 and infected 145,369.
Hourly workers will continue to be paid, and workers across the
company will be allowed to work remotely if their jobs permit it,
Apple Chief Executive Tim Cook said in a note on the company's
website.
"The most effective way to minimize risk of the virus's
transmission is to reduce density and maximize social distance," he
said.
The company's stores inside Greater China, closed previously,
were all open Saturday, highlighting how the coronavirus center of
gravity has shifted to Europe and the U.S. China reported 11 new
infections and 13 new deaths for Friday.
Apple's decision came as the company disclosed that a retail
employee at its Santa Monica store tested positive for the virus.
The staffer, who informed the company late this week of the
diagnosis, hadn't been to the store since taking leave March 2 to
care for a sick relative, the company said.
An estimated 8% of Apple sales occur at physical retail stores,
according to Loup Ventures, a research-driven venture-capital firm.
The tech giant has around 500 retail stores world-wide, including
hundreds in the U.S. Apple has seen its retail stores as a product
showcase, one that was championed by late co-founder Steve
Jobs.
The company doesn't disclose store sales but says that physical
retail, its website and its direct sales force contributed 31% of
the company's $260 billion in sales in the fiscal year ended in
September 2019.
Outdoor gear retailer Patagonia also said it would shut its
stores, offices and operations for at least two weeks and will
reassess March 27. Employees will receive their regular pay, the
company said. Other retailers are likely to follow, analysts
said.
"They are a big enough player that they can create a
conversation about the disconnect between the safety of office
workers and those that interact directly with customers," said Gene
Munster, a longtime Apple analyst with Loop Ventures. "Because of
that, we're going to see more store closings."
Apple's move is part of a broad shutdown of business activity in
an effort to slow the spread of the new virus. President Trump has
broadly barred people arriving from Europe. Factories in China's
Hubei province, where the disease first appeared, remain largely
shut. Italy clamped down on commercial activity across the country.
The world's four biggest cruise lines are suspending U.S. sailings
for a month.
A similar decision by the National Basketball Association to
suspend its season on Wednesday led to a cascade of suspensions
across the sports world, as the National Hockey League, Major
League Baseball and others followed suit. The NBA decision was made
by Commissioner Adam Silver, who serves on Duke University's board
of trustees alongside Mr. Cook.
The Apple store closures could have similar influence over
retailers and restaurateurs, which have been closely monitoring the
outbreak. Baristas at Starbucks cafes this week raised concerns
about the risks of interacting with the millions of Americans who
come into their shops. Starbucks Corp., McDonald's Corp. and Darden
Restaurants Inc. all said they were monitoring developments and
committed to paying workers on sick leave.
The move underscores the challenge many companies are navigating
as they encourage social distancing across their workforces. In
early March, Apple began encouraging its Bay Area employees to work
from home. At stores, it had implemented deep-cleaning practices,
canceled classes on its products and created extra space for
appointments with technical support.
In addition, companies and their workers face a tightening
patchwork of border controls and office closings that are making
business all but impossible, whether in professional fields that
require client contact or hourly occupations that can't be done
offsite.
Governments have responded with a range of efforts to ease
liquidity for financial markets and shore up the economy with more
spending. Apple said it has expanded its leave policies to
accommodate illness, caring for loved ones, mandatory quarantines
and childcare issues.
Apple reported that it's revenue rose 9% in the December quarter
to $91.82 billion, driven by sales of devices and services
connected to the iPhone such as smartwatches and streaming-TV
subscriptions. Sales of iPhones, which account for more than half
of its revenue, rose 8% to $55.96 billion.
The tightening patchwork of border controls and office closings
are in some cases making business all but impossible, whether in
professional fields that require client contact or hourly
occupations that can't be done off-site.
Governments have sought to ease the impact with a range of
measures to ease liquidity for financial markets and shore up
economies with more spending. Apple said it has expanded its leave
policies to accommodate illness, caring for loved ones, mandatory
quarantines and child-care issues.
The tech giant reported that its revenue in the December quarter
was up 9% to $91.82 billion, driven by sales of devices and
services connected to the iPhone such as smartwatches and
streaming-TV subscriptions. Sales of iPhones, which account for
more than half of its revenue, rose 8% to $55.96 billion.
In February, Apple became the first major U.S. company to say it
wouldn't meet previous guidance due to the spread of the virus.
Apple said it would fall short of its revenue projection of $63
billion to $67 billion for the current quarter. Previously, the
company reported that revenue rose 9% in the December quarter to
$91.82 billion, driven by sales of devices and services connected
to the iPhone such as smartwatches and streaming-TV subscriptions.
Sales of iPhones, which contribute more than half of its revenue,
rose 8% to $55.96 billion.
Write to Andrew Dowell at andrew.dowell@wsj.com and Tripp Mickle
at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
March 14, 2020 16:24 ET (20:24 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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