Adidas, Puma warn of virus blows to 2020 business

FRANKFURT: German sportswear makers Adidas and Puma on Wednesday warned the coronavirus outbreak would deal painful blows to their business in 2020, weighing especially on the first quarter with store closures and lower sales.

Adidas said its revenues in vital market China would come in between €800 million and €1 billion, lower than the 2019 January-March periods.

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 “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.

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,” he added.

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 Wednesday sales of €23.6 billion in 2019, up almost 8%, for a net profit up 16.1% at almost €2 billion.

Adidas added that it had “performed strongly” in the first three 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.