Bjorn Gulden, Puma SE Chief Executive Officer, put a brave face on the retail crisis in China caused by the coronavirus, forecasting the German sporting-gear maker’s revenue to gain 10% worldwide this year. “Long-term this will not have an impact on our industry and our brand,” Gulden told journalists Wednesday. After sliding 5.5% over the past month, Puma shares rose as much as 9.5% to a record.
The athletics wear maker said it expects operating profit to rise by as much as 18% this year to a range of 500 million euros to 520 million euros ($540 million to $562 million). That’s dependent on reaching the sales target, which has become more difficult since the outbreak, the CEO said. “Can we reach the guidance or not? We will do everything we can,” Gulden said.
The sportwear brand generates about 13% of its sales from China, where authorities have taken drastic measures to contain an outbreak that has claimed more than 2,000 lives. As many as 70 of the company’s 110 stores there are closed and almost all franchises and partners have shut as well. Most of Puma’s local factories have restarted after a lengthened holiday break for the Lunar New Year, but they aren’t fully staffed yet as travel restrictions prevent workers from returning home, according to Gulden.
Exporting from China has become “dramatically” easier over the past five days and most ports are open, Gulden said. The difficulty is getting permission to get trucks to go from factories to the ports. “We feel retail February, destroyed,” Gulden said.
Rival Adidas AG experienced a 85% drop in the weeks since Jan. 25, the company said by email. Puma said sales and earnings have suffered in the first quarter as it forecast weaker-than-expected earnings for the year. Puma’s revenue outlook implies no major impact from the coronavirus, for the time being, Volker Bosse of Baader Bank said by email.
Chinese employers have encouraged people to stay home, shopping malls and restaurants are empty, and amusement parks and theaters are closed. Non-essential travel is all but forbidden. Many consumer goods companies have said e-commerce in that market will offset the effect of the store closures.
Both companies pointed to weaker performance elsewhere in Asia. Adidas said it had observed some traffic declines in Japan and South Korea, but not “a major business impact.” Puma said a decline in Chinese tourists elsewhere in Asia was hurting demand. Adidas shares rose as much as 3.2% in Frankfurt. Before the virus hit, business had performed strongly in China, the company said.