FRANKFURT | German sports equipment company Adidas reported Monday a net income for the first quarter of 2020, a drop of 95 % from a year earlier, a result of falling sales driven by the health crisis.
The net income group share was 31 million euros ($47 million), affected by a strong decline in sales related to closed its stores in the wake of the pandemic of novel coronavirus.
This performance is significantly lower than the consensus expectations polled by Factset, who forecast a profit of 177 million euros ($269 million).
Because of the uncertainty of the time related to the duration of closure of its stores, the group Herzogenaurach indicates that it does “may still not give prospects (results) including the effects for the year 2020 to complete”, according to a press release.
From January to march, the turnover fell 19 % year on year, to 4.75 billion euros (7.25 billion $), the flagship brand Adidas has declined to 20 %, more than its sister american Reebok (-12 %).
China, usually the locomotive of the group, is seen, in particular, its sales collapsed by 45 %.
The company has had to close the vast majority of its stores in this country as early as February, on the order of authorities, before being able to reopen in march, at a time when it had to close its stores in Europe and North America.
While “over 70 % of its shops remain closed in the world” and without knowing how it will unfold the gradual return to normal, the group expects “a decline even more pronounced in sales and earnings for the second quarter of 2020 in the first quarter.
For the period from April to June, it now expects that sales at constant exchange rates are “less than 40 % in the second quarter of 2019 year, and a “operating results-negative”.
The group, headed by the Danish Kasper Rorsted has seen its reserves in a cash decrease of more than half a billion euros in the first quarter. Got it in April the agreement of the German government for an emergency loan of € 2.4 billion (3.66 billion usd) through the public bank KfW and several private banks are committed to lend up to 600 million (914 million us $), all to ensure its liquidity.
Adidas has been in this context at the centre of controversy after it announced waive the payment of the rent of its shops closed due to restrictions. In the Face of the outcry, he was finally brought back.