The German athletic giant had said last month in its fourth-quarter earnings report that it was working “under the assumption that the situation will normalize in the short term and that we then will be able to achieve our full-year targets.” Now that the COVID-19 crisis is escalating globally, however, the company has revised its outlook.
“Given the duration of the situation in China, the negative impact in other Asian countries and now also the spread to Europe and the U.S., we unfortunately have to conclude that a short-term normalization will not occur,” the company said. “The development over the coming weeks and months is impossible to predict, and we currently cannot quantify the negative effect this could have on our full-year revenue and earnings.”
The company said all of its offices worldwide remain open, including its Shanghai unit, which reopened after the officially extended holiday period for Chinese New Year. Within China — where COVID-19 cases have now surpassed 80,000 — sales have been “severely affected” but there are early signs of improvement as “traffic that had initially been extremely low picked up over the weekend.” Other Asian markets such as Singapore, Japan and South Korea, which typically benefit from a steady influx of Chinese tourists, continue to experience significant negative effects on sales, the company said.
In Europe, all of Puma’s stores remain open but foot traffic has declined considerably. Locations in northern Italy, which has been particularly hard hit by the virus, are operating under reduced opening hours as enforced by the Italian government.
On the bright side, Puma’s manufacturing operations in China, which accounts for 20% of its global sourcing volume, are normalizing, according to the company. The brand said all of its Tier 1 (finished product) supplier factories are open again and operating at 80% to 100% of capacity. Almost all of its Tier 2 (material) factories are also up and running. And now that all seaports have reopened and ground transportation is functioning normally again in China, outbound logistics are running smoothly. “Therefore, our global supply chain is currently not at risk apart from minor delays,” Puma said.
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