Adidas, Puma warn of coronavirus hit to China business

German brands make almost a third of sales in Asia

German sportswear makers Adidas and Puma both said on Wednesday that the coronavirus outbreak was hurting their business in China due to store closures and fewer Chinese tourists travelling and shopping in other markets.

Adidas and Puma make almost a third of their sales in Asia, which has been the major growth market for the sporting goods industry in recent years. The region is also a key sourcing hub, with many sneakers produced in China and other Asian countries.

Adidas said in a statement that its business in the Greater China area had dropped by about 85 per cent year-on-year in the period since Chinese New Year on January 25th.

Adidas said it had also seen lower shopper traffic, mainly in Japan and South Korea, but added that it had not yet registered any major business impact beyond Greater China.

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Impact

“The magnitude of the overall impact on our business for the full-year 2020 cannot be quantified reliably at this point in time,” it said, adding it would give more details when it publishes 2019 results on March 11th.

Adidas sells its products from about 12,000 stores in China, most of them franchises plus less than 500 own-operated stores.

Puma said it expected the virus outbreak to hit its sales and profits in the first quarter but it still hopes to reach its targets for 2020.

Puma said more than half of its stores in China were temporarily closed and the decline of the Chinese tourism business was also hurting other markets, especially in Asia.

It said the uncertainty about the duration of the virus made it difficult to forecast but it is working under the assumption that the situation will normalise in the short-term.

In the fourth quarter, Puma reported its strongest sales growth in the Asia/Pacific region of a currency-adjusted 23 per cent. – Reuters