What’s Going On Here?While Puma admitted on Wednesday that the coronavirus has been disrupting its sales lately, the sports brand is just sort of taking everything in stride. What Does This Mean?The coronavirus has halted manufacturing, reduced travel, and closed shops – all of which, clearly, is bad for business. And some major sportswear brands have been particularly at risk. Adidas, for example, earns around a third of its revenue from the Asia-Pacific region, and it's seen an 85% drop in sales since the epidemic broke out.
Puma is massively reliant on the market too, and revealed it’s also seen a drop in demand. But the sportswear giant still reported better-than-expected revenue and earnings in the last quarter, and forecast a 10% gain in revenue for this year. The company even announced it was increasing its dividend payments, and its shares were quick to make up for their last few weeks of losses. Why Should I Care?For markets: Digital, baby.
Analysts figured Puma was so relaxed about the virus because the company had already received orders for the months ahead, and they weren’t necessarily wrong: Puma admitted it’s had to delay customers’ online orders due to the virus. And since many sportswear products are manufactured in China, current travel restrictions could be preventing those goods from making their way overseas too. Once things are back to normal, then, there might well be a surge in sales as the backlog gets fulfilled.
Zooming out: Swish swoosh.
Sports brands do have one thing in particular going for them this year: the Olympics. By putting their logos on the best of the best in front of millions of viewers, sports brands might expect to see a significant sales boost. Nike will certainly be hoping Chris Coleman, the star sprinter it’s sponsoring, will follow in the rapid footsteps of Puma’s former top dog, Usain Bolt. The already-struggling Under Armour, meanwhile, will probably just be hoping to avoid another embarrassing slip-up… | 