Sportswear brands Adidas and Puma have reported a collapse in sales in China amid the Coronavirus outbreak and have warned that further disruption is spreading to other markets. In particular, Adidas said it expected first-quarter sales to drop by up to €1 billion in greater China and about €100 million in Japan and South Korea. This would lead profit to decline by between €400 million and €500 million.
Despite the encouraging signs coming out of China, Puma has said it no longer expects its business to return to normal soon and added it was abandoning the 2020 guidance it gave on February 19 that had assumed the crisis would be short-lived.
"Given the duration of the situation in China, the negative impact in other Asian countries and now also the spread to Europe and the US, we unfortunately have to conclude that a short-term normalisation will not occur," Puma said in a statement.
Since emerging in China late last year, the new coronavirus has been spreading around the world and it has now been labelled as a pandemic by the World Health Organisation (WHO). In recent days, sporting events around the world have been cancelled, postponed or played behind closed doors, with questions being raised about the viability of the upcoming Olympic Games in Japan and Euro 2020 football championship. Adidas’ Chief Executive, Kasper Rorsted, has explained that the postponing of both events would mean a €70m hit to sales.
Shares in Adidas and Puma were down 9% and 5% on Wednesday afternoon and, after last month’s warning of an impact from the virus, Nike’s shares were down 3%.