Major sportswear brands Adidas
On Wednesday, Adidas reported that it had seen a dizzying 85% drop in overall business in China in the wake of the Coronavirus. Adidas has also reported that traffic is down in other Asian countries such as Japan and South Korea, though not nearly to the extent of China. Adidas, as well as Puma, joined the ranks of companies, warning investors of the growing impact on their business as the Coronavirus disrupts the global economy. While sales and overall store traffic remain down, stocks are holding steady, at least for the time being.
The two sportswear companies suffered setbacks in their supply chain after being forced to close factories. Both companies are working to mitigate the effects of the temporary closures, though most of the Chinese factories owned by both are now re-opened. Both companies have closed many of their Chinese storefronts; Puma, for example, has closed over half of its stores in China and has reported decreased traffic at those that remain open.
China's growing middle class has been a boon for sportswear companies, as the booming trend of physical fitness among China's middle class has spurred sales of activewear. The Coronavirus all but dashed this market; while companies like Adidas have still seen growth among their Chinese operations, the effects felt by the Coronavirus are widespread and have slowed the once rapid growth of the Chinese activewear market to a dismal crawl. Even with cases of the Coronavirus slowing, recovery from the considerable drop in business will likely be slow. A return to pre-outbreak levels of store traffic will likely take some time as consumer confidence among Chinese consumers recovers, especially as the Chinese government attempts to come to grips with what has essentially been a near-total shutdown of the economy.
- https://nypost.com/2020/02/19/adidas-puma-getting-crushed-in-china-amid-coronavirus-outbreak/
- https://finance.yahoo.com/news/coronavirus-update-chinas-death-toll-crosses-2000-amid-widening-fears-for-the-economy-192546133.html
- https://qz.com/1804803/adidass-sales-slammed-amid-chinas-coronavirus-outbreak/