FRANKFURT – Sports apparel and shoe company Adidas saw its earnings fall sharply in the first quarter as the virus outbreak closed 70% of its global store base. Net profit from continuing operations fell 97% to only 20 million euros from 631 million euros in the same period a year ago.
The company, based in Herzogenaurach, Germany, said Monday that first quarter revenues fell 19% in currency neutral terms. E-commerce did pick up as the outbreak shutdowns spread in March, rising 55 percent in March and was continuing to climb.
“Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies,” said adidas CEO Kasper Rorsted.
Revenue development reflected the phasing of the global outbreak, with a sales decline of 58% in China, where the outbreak started, followed by downturns elsewhere.
The company said it had incurred costs in the three-digit millions over product take backs to manage inventory. It said its revenues were recovering in China during the first three weeks of April after the quarter ended, and global e-commerce revenues were showing another significant acceleration.
However, store closures in Europe, North America, Latin America, emerging markets, Asia-Pacific and Russia and the former Soviet Union mean that revenue development remained “severely impacted.”
The company said the situation regarding the outbreak was so uncertain that it could not provide an outlook for earnings for the full year.
CEO Rorsted said in a statement that “despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas. Consumers are developing an increased appreciation of well-being. They want to stay fit and healthy through sports.”