Adidas warned on Wednesday of a big drop in profits in mainland China due to the pandemic and disclosed that despite initial indications of improvement there the virus has already affected its businesses in other countries.
The German sportswear icon and maker of some of the most popular athletic apparel in the market, revealed that it sees losing around $1 billion dollars in sales in China, while Puma announced it no longer estimates any recovery of profits in the near-term.
Adidas said that sales in the mainland, Hong Kong and Taiwan were robust in the first weeks this year, but the virus has impacted them heavily. Revenues of Adidas have already taken a huge hit in the past few weeks, plunging 10 percent early Wednesday.
Puma stressed it can't measure the potential repercussion of the the outbreak, and so February's goal of a 10 percent earnings in sales for 2020 is no longer relevant.
Global demand for sports gear will take longer to bounce back compared to other consumer products, Adidas Chief Executive Officer Kasper Rorsted bared in a Bloomberg TV interview.
Between the Chinese New Year celebrations and by the end of February, Adidas sales in China plummeted 80 percent compared to the prior year.
The company now projects sales in the first quarter will fall around $906.7 million to $1.1 billion below its level in 2019 in China.
Adidas and rival Puma account for about a third of their revenues in Asia, which in recent years has become a big growth market for sports goods. The area is also the main source market, with China being a major supplier to the industry.
On the other hand, any delays in the Olympic games would equate to the organization losing around 50 million and 70 million euros. Adidas has around a fifth of its production in China.
Adidas has noted its shops and factories are reopening since the end of February and some shoppers have returned. While the company has faced some setbacks in its supply chain, which, like other businesses relies on China for raw materials and manufacturing, none were significant, and it said that most of the country's factories are again working.
Adidas halted all wholesale shipments to retailers last month to try to steer clear from a surplus of unsold goods on the market, so it will take back a large amount of stock from its suppliers, which Adidas will put up for sale in its own stores later this year.
