Adidas (ADS.DE) suffered a 95% drop in net profit to €31m (£27m, $33.5m) in the first quarter this year, from the same period a year ago, as the coronavirus pandemic forced store shutdowns.
Shutdowns began with the group’s hugely important Chinese market in January, followed by more closures amid country-wide lockdown across Asia Pacific, and then the rest of the globe during March. The German company said that 70% of its stores are currently closed across the world.
Sales declined by 19% in the first quarter, and Adidas expects them to fall by more than 40% in the second quarter.
The world’s second-largest sporting equipment company has scrapped its full-year outlook as it is not sure how long the closures will last.
"Both top-line and bottom-line declines in the second quarter of 2020 are currently expected to be more pronounced than those recorded in the first quarter, with currency-neutral sales projected to come in more than 40% below the prior year level and the operating result to be negative,” Adidas said.
The company said online sales rose 35% to €4.75bn in the first quarter, but that was not enough to make up for lost sales from bricks-and-mortar stores.
Adidas had already revealed in February that coronavirus had caused an 85% plunge in business activity in China. Its biggest rival Nike also said in February that it had braced for the coronavirus outbreak to majorly impact its China sales.
The Chinese government has eased its country-wide lockdowns as new cases of coronavirus infection have dwindled.
Adidas attracted criticism last month for saying it would not pay rent on its closed stores for the month of April, but later backtracked and said it would pay its rent.