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Adidas AG said a slump in revenue caused by the coronavirus will cut first-quarter profit in China by about half a billion dollars.
The German sportswear maker forecast revenue in that key market will fall by 800 million to one billion euros ($908 million to $1.1 billion), stripping 400 million to 500 million euros from profit.
Adidas declined to estimate the full-year impact of the spread of Covid-19, which will be worse because business is already also slowing in Japan and South Korea. Excluding the epidemic, Adidas projected currency-neutral sales would grow 6 to 8 per cent this year. That’s slightly more aggressive than last year’s forecast around this time, which was 5 to 8 per cent.
The shoemaker faces tough competition from rival Puma SE, which last month set a target for a 10 per cent increase in revenue this year though conceded that’s a tough goal.
Adidas said sales slumped 80 per cent in China last month, but stores and warehouses have gradually reopened and consumer traffic is slowly picking up. To try to prevent a glut of unsold products on the market, Adidas cancelled all wholesale shipments to retailers in February and it may take back a significant amount of stock from its partners, which Adidas will put up for sale in its own stores later this year.
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