German sporting goods manufacturer Adidas has had to stomach a massive financial hit in the first quarter due to the coronavirus pandemic, with its net income from continuing operations collapsing by 97 per cent.
The key figure for the world’s second-largest sporting goods corporation reached just 20 million euros ($A33.9 million) in the quarter ranging from January through March, Adidas announced on Monday.
It expects an even worse slump in the second quarter, leading the company to an operating loss.
“At the moment, we are focused on managing the current challenges and doubling down on the recovery in China and the opportunities we see in [e-commerce],” Adidas chief executive Kasper Rorsted said in a statement.
“While we prepare for the return to a more normalised state of the business, we also remain realistic: over 70 per cent of our stores worldwide are currently closed,” he added.
The company’s operating profit reached only 65 million euros in the first quarter, a fraction of the 875 million euros it achieved at the same time last year. Its revenue fell by 19 per cent to 4.75 billion euros.
During the first two months of the year, the economic consequences of the coronavirus crisis were a strain on business mostly in Asia and particularly in China – the second-most-important individual market for Adidas after the United States.
From mid-March, the crisis then spread to other markets worldwide.
Adidas this month received a 2.4-billion-euro loan from German state development bank KfW to deal with the economic fallout from the pandemic.