ASIA: SARS Virus Could Impact Retailers, Brands
The SARS (severe acute respiratory syndrome) virus has killed nearly 80 people so far and infected more than 2,200 others in parts of Asia, Europe and North America.
And its spread has forced several companies, including Nike, Gap and adidas to rethink Asian travel plans. Federated Department Stores, which owns Macy's and Bloomingdale's, has suspended travel to Hong Kong and Singapore.
Despite this caution, retailers so far haven't said they've seen higher rates of SARS-related absenteeism among their Asian workforce. But a restriction on travel could slow down the product development cycle.
Teresa Meyer, an analyst for footwear, apparel and sporting goods at DA Davidson, told thestreet.com that footwear companies are likely to be especially worried about SARS because their subcontracting base is so highly concentrated in Asia, particularly in China.
"The epicentre of the outbreak is in the southern province of China, which is the epicentre of athletic footwear," she points out.
Asia accounts for some 30-40 per cent of apparel imports into the US. For luxury retailers, it represents one of their key customer markets, accounting for around 13 per cent of global luxury goods revenues.
However, US luxury retailers are at less risk than their European competitors, JP Morgan said on Wednesday, basing its observations on the proportion of sales outside Japan where the epidemic has not spread. A research note from analyst Sagra Maceira de Rosen said overall retail sales in Hong Kong are running between 50 per cent and 70 per cent below expectations.
"The SARS epidemic in Southeast Asia is likely to have an important negative impact on the sales of luxury goods in the region," de Rosen said.
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