Apple (NASDAQ:AAPL) announced that it is shutting down all its 17 retail stores in Italy due to the coronavirus pandemic. In a statement given to Bloomberg, the company stated that its stores in Italy will remain closed until further notice. Notably, Italy has been most affected by coronavirus outbreak after China. The country has registered nearly 12,500 positive COVID-19 cases so far while more than 820 people have lost their lives.
Apple’s latest store closure announcement seems a formality, as the whole country has already been put under lockdown by the government to contain the coronavirus impact. The latest shutdown marks the second store closure announcement due to the rapidly spreading coronavirus. In February, the company had closed all its 42 retail stores in China.
Coronavirus Hurts iPhone Demand and Supply
Rapidly-spreading COVID-19 is severely hurting Apple iPhone sales. Citing data compiled by the China Academy of Information and Communications Technology, Reuters reported that iPhone sales in China plunged 61% year over year in February 2020.
The novel coronavirus is impacting Apple’s supply chain as well. The company’s iPhone assembling facilities were initially shut down outside Hubei (the epicenter of the coronavirus). The company has been slow to ramp up production back to normal levels, which is impacting global iPhone supply, per a BBC report.
The tech giant depends on a huge network of China-based suppliers to provide key components for its main devices. For instance, Taiwan-based Foxconn, which makes iPhones and other gadgets on behalf of Apple, is yet to fully resume work across its plants in China though some of its facilities are operating at partial capacity.
All such suppliers will need to pass government inspections with their facilities disinfected and with proper accommodation for potentially quarantining affected workers.
Citing demand and supply disruptions, Apple in mid-February had stated that it might not be able to meet its quarterly revenue expectations issued on Jan 28, 2020. Earlier revenue projections for the tech giant’s fiscal second-quarter 2020 were between $63 and $67 billion.
Lower iPhone Sales Affect Apple Suppliers Too
Apple is known to keep suppliers on their toes to such an extent that even minimal changes in demand of iPhone related devices creates a stir among its supplier base. Suppliers including Cirrus Logic (NASDAQ:CRUS) , Skyworks (NASDAQ:SWKS) , Qorvo (NASDAQ:QRVO) , and ON Semiconductor (NASDAQ:ON) , are likely to bear the brunt of anticipated constrained worldwide iPhone demand supply.
ON and Skyworks have already lowered their financial outlook. ON cited soft order trend in China as the main reason behind the outlook cut. Skyworks sees weak demand environment for its products due to supply chain disruptions.
Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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