Sneaker and athletic apparel giant Nike (NYSE:NKE) is closing all of its U.S. stores, as well as those in Western Europe, Canada, and Australia and New Zealand, starting Monday and continuing through March 27, CNBC reported Sunday morning.
However, the company is keeping stores in other parts of the globe open, including China, Japan, and other Asian countries that sustained the first wave of the COVID-19 pandemic. A Nike spokeswoman told CNBC that the company would continue to pay workers of closed stores full-time wages during the retail shutdown.
The news comes after Nike urged its U.S.-based corporate employees to work from home where possible last week. It also follows last week's suspension of the NBA season and the cancellation of the NCAA college basketball tournament.
Given the impending hit to retail sales, the cancellation of major sporting events that provide promotional venues for the company's products, and the possibility of supply chain disruption, COVID-19 will almost certainly affect Nike's earnings and cash flow this year. Shares of Nike have dropped 25% year to date, versus 19% for the broader market as measured by the S&P 500 index.
Investors will receive some clarity on potential impacts in short order, as the company is on deck to report fiscal third-quarter 2020 earnings on March 24. Until then, shareholders can take solace in the fact that the shoe giant enjoys a fortress balance sheet, boasting $8.1 billion in working capital and just $3.5 billion of long-term debt. In other words, while the prospect of a sustained COVID-19 outbreak is unpleasant to contemplate, Nike has ample staying power to weather a prolonged business downturn.