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COVID-19 negatively impacts Puma business

Mar '20
Pic: Puma
Pic: Puma
Puma anticipates negative impact on full-year revenues and earnings amidst COVID-19 outbreak. The company continues to closely monitor the development and prioritises the wellbeing of its employees and partners. All their offices around the world are open. The office in Shanghai re-opened after the officially extended holiday period for Chinese New Year.

COVID-19 has also negatively impacted their business since the beginning of February both in terms of sales and sourcing. China accounts for less than 20 per cent of its international sourcing volume. Factories outside China have not been impacted. Within China, all of their tier 1 (finished product) supplier factories are open again and are operating at 80-100 per cent of capacity. Almost all of their tier 2 (material) factories are also up and running. Puma’s outbound logistics are largely in operation with all sea ports now open and most of its transportation on land, from the factories to the sea ports, are functioning normally again. Therefore, the global supply chain is currently not at risk apart from minor delays, the company said in a press release.

In China, where most of both owned and operated as well as partner stores were temporarily closed in February 2020 due to restrictions imposed by local authorities, sales have been severely affected. There are now early signs of improvement. Most of the stores in China and those of its partners are now open again. Traffic that had initially been extremely low, picked up over the weekend. Other Asian markets such as Singapore, Malaysia, Japan, and South Korea, which typically benefit from Chinese tourists, continue to see heavy negative effects on sales. Additionally, the virus is spreading into other parts of the world. Despite the spread of COVID-19 in Europe, almost all their stores there are still open. Those in Northern Italy operate under reduced opening hours as enforced by the authorities. Across Europe, Puma has registered significantly lower footfall traffic.

Given the duration of the situation in China, the negative impact in other Asian countries and now also the spread to Europe and the US, the company has concluded that a short-term normalisation will not occur.

The development over the coming weeks and months is impossible to predict and they currently cannot quantify the negative effect this could have on the company’s full-year revenue and earnings.

Fibre2Fashion News Desk (GK)

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