German sports fashion rivals Adidas and Puma have issued sales and profit warnings due to the corona virus. Adidas fears about a billion euros in turnover and half a billion in profits may go up in smoke as the pandemic rages over the world, causing shops to close and sports events to get cancelled.
No normalisation in sight
Adidas expects sales in China to fall by a billion euros in the first quarter, and operating profits by up to half a billion, meaning a drop of around 10 %. Sales in China went down by almost 85 %, due to closed stores.
Puma is also concerned: "Given the duration of the situation in China, the negative impact in other Asian countries and now also the spread to Europe and the U.S., we unfortunately have to conclude that a short-term normalization will not occur", a spokesperson of the German company told Reuters.
While the situation in China now seems to be improving slightly, store visits are decreasing in Japan and South Korea - two countries with a significant number of visits by Chinese tourists. Fewer shoppers are coming to the stores in Europe as well. Also, all over the world sporting events are cancelled, postponed or played without spectators - there is great uncertainty about the upcoming Olympics and the Euro 2020 football tournament.
Both companies generate almost a third of their turnover in Asia, which has been an important growth market for sports goods in recent years. Moreover, a significant part of the production also comes from that region. However, most of the factories are back in business and the supply chain would not be affected much.