Adidas, Puma warn of coronavirus blows to 2020 business

FRANKFURT AM MAIN, Germany – German sportswear makers Adidas and Puma on Wednesday, March 11, warned the coronavirus outbreak would deal painful blows to their business in 2020, weighing especially on the 1st quarter with store closures and lower sales.

Adidas said its revenues in key market China would come in between 800 million and one billion euros ($907 million to $1.1 billion), lower than the 2019 January-March period.

Sales in China plunged by 80% in late January-early February.

“Following the outbreak of the coronavirus, our business in Greater China has experienced a significant negative impact since Chinese New Year,” chief executive Kasper Rorsted said.

Meanwhile Puma said it “cannot quantify the negative effect” but pointed to sales “severely affected” in China and other Asian countries, adding there was also “significantly lower” traffic to its stores in Europe as the virus spreads.

The historic rivals both faced disruption to their supply chains, although the gradual reopening of factories in China and sourcing from other countries has so far limited the impact.

Nevertheless, “we cannot yet reliably quantify the magnitude of the overall financial impact in 2020,” Adidas CEO Rorsted said.

Shares in Adidas fell on the news, plunging 8.1% to trade at 203.15 euros around 1 pm (1200 GMT) in Frankfurt and trailing the DAX blue-chip index which was up 0.8%.

Looking ahead, “the further recovery in Greater China, the extent of spillover into other countries, as well as the availability of raw materials remain largely uncertain,” Rorsted added.

Adidas finance director Harm Ohlmeyer said the group expected a sales impact of between 50 and 70 million euros if this year’s major sporting events, the Euro 2020 football tournament and the Summer Olympics in Japan, are canceled.

Rorsted said the likely effect would be “marginal,” while he expected people to continue to exercise at home and shop online even under pandemic conditions.

Without the effects of the coronavirus outbreak, Adidas had forecast sales growth of 6% to 8% and “double-digit-rate improvement of the bottom line” in 2020.

It reported on Wednesday sales of 23.6 billion euros in 2019, up almost 8%, for a net profit up 16.1% at almost two billion euros.

Adidas added that it had “performed strongly” in the first 3 weeks of 2020, before the coronavirus began to make itself felt.

In China, one of its most important markets, Adidas owns 500 stores and boasts a network of around 11,500 franchises. – Rappler.com