Adidas AG has posted a plunge in first-quarter earnings and warned of an even bigger impact to its top and bottom lines in the next three-month period as the coronavirus outbreak keeps most of its store fleet shuttered.
The Germany-based sportswear giant’s net income for the first quarter plummeted 97% to 20 million euros ($21.69 million at current exchange), with earnings of 13 pence (14 cents) per share. Revenues also decreased 19% to 4.75 billion euros ($5.15 billion), with a 20% drop at its namesake brand and a 12% slide at Reebok.
Although e-commerce accelerated 35%, the platform — which Adidas described as “the only channel that has remained fully operational in most parts of the world” — was able to only partially offset the physical store sales decline due to pandemic-induced closures.
“Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies,” CEO Kasper Rorsted said in a statement. “I am proud of how our Adidas family has been working together to support both our company and our communities. At the moment, we are focused on managing the current challenges and doubling down on the recovery in China and the opportunities we see in e-com.”
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According to the company, more than 70% of its outposts remain closed around the world. Although its locations in Greater China and South Korea reopened in March, Adidas temporarily shut down its stores across North and South America, as well as Europe, Russia and other large swaths of the Asia-Pacific region, to help prevent the spread of COVID-19, which has sickened more than 2.98 million people around the world and led to at least 207,400 deaths.
The athletic behemoth has predicted that both its top- and bottom-line declines in the second quarter will be “more pronounced” than those in the first. It expects sales to come in more than 40% lower than the prior year period and opted against providing an outlook for the full year due to ongoing coronavirus-related uncertainties.
“Despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas,” Rorsted added. “Consumers are developing an increased appreciation of wellbeing; they want to stay fit and healthy through sports. Our focus on accelerating our own retail and digital business will serve us even better in the future.”