German sportswear maker Adidas on Monday reported first-quarter profits slashed 95%, blaming the collapse in sales inflicted by the coronavirus pandemic.
Net profits fell to 31 million euros ($33.6 million), down from 632 million euros in January-March 2019 and a fraction of forecasts from analysts surveyed by Factset.
“Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies,” Chief Executive Kasper Rorsted said in a statement.
As the virus spread across the world, the group was forced to close stores beginning in vital growth market China.
Even as sales there have begun to rebound, closures across much of the rest of the world – amounting to more than 70% of Adidas’ total network – mean the group “is still not able to provide an outlook for the full year 2020.”
“Both top- and bottom-line declines in the second quarter of 2020 are currently expected to be more pronounced than those recorded in the first quarter,” Adidas said, forecasting a slump in currency-adjusted sales of more than 40% and an operating loss.
After its cash reserves shrank by more than 500 million euros in the first quarter, Adidas in April secured an emergency 2.4 billion-euro loan from public investment bank KfW and 600 million euros from private banks.
The group was at the center of a brief storm of outrage in home country Germany after it said it would halt rent payments for its stores during the coronavirus shutdowns.
Faced with public outcry, Adidas backtracked on the policy soon afterward.