The coronavirus’ spread around the world has forced the cancellations or suspensions of major global sporting events, spelling trouble for big-name athletic companies and their stocks.
Yesterday, Wall Street recorded its worst day since the “Black Monday” crash in 1987, and again triggering a circuit breaker that led the New York Stock Exchange to suspend trading for 15 minutes. (Yesterday’s trading halt was the second for the week.) Amid the broader market selloff, shares for Nike Inc. dropped nearly 12%, while Adidas AG was down more than 14% and Under Armour declined almost 15%.
In a distribution note to clients, Susquehanna Financial Group analyst Sam Poser wrote that COVID-19, which has topped 125,000 cases worldwide, has impacted Nike’s business both inside and outside of China, where the outbreak originated in December. “On top of which, the cancellation of the NBA season until further notice, announced last night, does little to assuage near term nerves,” Poser wrote on Thursday.
Although the trading firm lowered its price target on Nike’s shares to $100 from $115, Poser said he believes that the sportswear giant “will prove to be a stalwart once the dust from the coronavirus settles.” (FN has reached out to Nike for comment.)
Adidas, on the other hand, forecasted on Wednesday a revenue impact of up to $1 billion in the first quarter due to sales declines in China during the first months of the outbreak. That same day, Puma abandoned the 2020 guidance it issued in February, sharing that it no longer expected the virus’ impact on its business to be short-lived. And in mid-February, before COVID-19 hit Europe and the U.S., Under Armour predicted a sales loss of roughly $50 million to $60 million during Q1 as a result of the illness.
According to new data from the Footwear Distributors and Retailers of America, U.S. shoe imports declined a steep 15.7% last month, marking the lowest import figures for January in a decade. More than 70% of the country’s footwear imports come from China, where the spread of COVID-19 had shut down entire cities for weeks and compelled the quarantine of more than 50 million people.
Major League Baseball, Major League Soccer and the National Hockey League became the latest professional organizations to suspend competition based on guidance from public health authorities including the Centers for Disease Control and Prevention. The decisions came a day after the National Basketball Association announced that it had suspended the regular season after Utah Jazz rising star Donovan Mitchell tested positive for the coronavirus.
On Wednesday, the World Health Organization officially declared COVID-19 a pandemic. The agency noted that it had not chosen to use the term “lightly or carelessly,” describing a “pandemic” as the “worldwide spread of a new disease.” The last time the WHO declared a pandemic was during the H1N1 outbreak in 2009, which sickened nearly a quarter of the world’s population.
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