Adidas has raised a red flag over the impact of the coronavirus on its Chinese operations.
The German sportswear maker warned that business activity in China has plunged 85% year over year in the period since the Lunar New Year holiday on Jan. 25. It cited a “material negative impact” as a result of the outbreak, which has led the firm to shutter a “significant” number of stores as well as see a “pronounced traffic reduction” at the locations that remain open.
Adidas added that it has been cooperating with Chinese authorities to ensure the safety of employees and their families. Although it also reported declining traffic in Japan and South Korea, the firm said it has yet to observe a “major business impact” beyond the Greater China area.
“As the situation keeps evolving on a daily basis, the magnitude of the overall impact on our business for the full year 2020 cannot be quantified reliably at this point in time,” a statement from the company read.
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Adidas operates about 12,000 stores in China, 500 of which are company owned. The region has driven substantial growth for the brand: Its sales in the country jumped 11% in the three-month period ended Sept. 30 and 14% in the second quarter.
On Feb. 5, Adidas announced that it was temporarily shutting down a “considerable” number of stores throughout China amid the continued spread of the illness. At the time, the company said that it was “too early to assess the magnitude” of the effect the closures will have on its business.)
Other firms, including rival Nike as well as Burberry, Skechers and Kate Spade parent Tapestry, have also shuttered outposts or reduced operating hours in heavily affected areas. As of Wednesday, the coronavirus has killed 2,012 people and infected more than 75,200.
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