Last week, Adidas issued a statement saying that it was implementing “applicable local directives” issued by Chinese authorities at all of its locations in the country, and confirmed that the company was already experiencing a negative impact on its Chinese operations—though it declined to go into further detail.
On Wednesday, though, Adidas revealed more information about the scale of the health crisis’ effects on business in China.
“Our business in the country performed strongly in the first three weeks of the year,” the statement said. “We have been experiencing a material negative impact from the coronavirus outbreak on our operations in China since then.”
Adidas has installed a dedicated task force to assess the situation, develop mitigation procedures and ensure the personal safety and financial security of the company’s employees in the country. The brand continues to work with Chinese authorities to take measures to contain the epidemic, including closing Adidas-owned and partner-operated stores.
“Consequently, our business activity in Greater China has been around 85 percent below the prior year level since Chinese New Year on January 25,” Adidas said.
The brand has seen some traffic decline in other markets like Japan and South Korea, but hasn’t yet observed a major impact on business outside of greater China. Adidas is currently operating less than 500 of its own stores in the country, representing not quite 5 percent of the 12,000 total doors, including franchise businesses, that comprise its store fleet.
“As the situation keeps evolving on a daily basis, the magnitude of the overall impact on our business for the full-year 2020 cannot be quantified reliably at this point in time,” Adidas said. “We will provide more details when we release our full-year results on March 11.”
Puma has also faced significant setbacks in the wake of the pandemonium caused by COVID19, the official name for this new strain of novel coronavirus.
Puma CEO Bjørn Gulden said Wednesday that despite a very strong showing over the past few months, “February has of course been negatively affected by the outbreak.”
The company turned in an historic year in 2019, with revenue reaching $5.94 billion, up more than 18 percent from the year prior. “All regions and all product divisions were up by double digits,” Gulden said, and Puma closed out the fourth quarter with a more than 20 percent increase in revenue from 2018.
Puma carried that momentum into the start of a new decade, but Gulden admitted that the athletic firm has reached an inflection point with its Asia business.
“The business in China is currently heavily impacted due to the restrictions and safety measures implemented by the authorities,” he said. “Business in other markets, especially in Asia, is suffering from lower numbers of Chinese tourists.”
Citing uncertainty around the virus’ spread and unknowns about when the outbreak will be contained, Gulden said it was impossible to accurately forecast the overall impact on his business.
“We will do everything we can in the short term to minimize the damage and remain very positive in the long term both for our industry and for Puma,” he said.