Adidas, Puma face big losses in China following coronavirus outbreak

Some major sportswear brands are reporting significant losses in their Asian markets due to coronavirus. Adidas reported a 10 per cent decline in shares while Puma’s have dropped 3.2 per cent. The two companies have said they’re now seeing slight improvements, but a Reuters report says their first-quarter sales are faltering.

Adidas sees $1.1 billion coronavirus hit to China sales, Puma warns on profit https://t.co/GGLMUNikuN pic.twitter.com/HQNCUC5SMa

— Reuters (@Reuters) March 11, 2020

Adidas expects to lose 1 billion euro (over $1.5 billion CAD) in first-quarter sales this year in China alone, plus an additional 100 million euros (over $150 million CAD) in Japan and South Korea. Last month, Adidas reported that its China sales had dropped by 85 per cent from the same period last year.

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Almost a third of Adidas and Puma sales come from Asia, as reported by Reuters. Plus, China and other Asian countries are major producers for the entire sporting goods industry. More recently, Puma and Adidas have both seen sales improve in China, but their global sales in the coming months could still be in jeopardy as the virus has reached pandemic status after spreading to Europe and North America.

Adidas has 12,000 stores in China, and around half have reopened. Both companies’ factories in China are, for the most part, open and operating once again as well, and they have not cancelled outbound deliveries from Asia. Besides the losses caused by the outbreak, Adidas expects sales to increase by 6 to 8 per cent over the year, and for the company’s operating margin to rise 10.5 to 11.8 per cent.

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Adidas and Puma are not alone in suffering losses due to coronavirus. Nike, Under Armour and much of the market in general have seen significant losses in the last month.