Adidas Estimates Coronavirus May Slice $1 Billion Off Revenue in China

Without considering the effects of Covid-19, Adidas projected currency-neutral sales will grow 6% to 8% this year

Adidas AG forecast first-quarter sales in China will fall by 800 million euros to 1 billion euros ($908 million to $1.1 billion) because of the coronavirus and said that business is slowing in Japan and South Korea.

• That will strip 400 million euros to 500 million euros from profit, Adidas said. Without considering the effects of Covid-19, Adidas projected currency-neutral sales will grow 6% to 8% this year.

Key Insights

• Adidas said sales in China were 80% below 2019 levels from Jan. 25 through end of February, but that since then stores and warehouses have gradually reopened and consumer traffic is slowly picking up.

• Investors will either appreciate Adidas’s honesty or dislike its vagueness. Because the effect of the virus’s spread across the world is hard to predict and the availability of raw materials is unclear, Adidas refrained from estimating the coronavirus’s overall impact.

• Adidas remains one of the world’s strongest brands and its share price should recover quickly once the coronavirus situation subsides, Cristina Fernandez of Telsey Advisory Group, said in a recent note.

Market Performance

• The Herzogenaurach-based company’s stock has dropped 24% this year.

(Except for the headline, this story has not been edited by Scrabbl staff and is published from a syndicated feed.)