Due to the fallout from the Coronavirus, numerous businesses have shut down their stores and have shifted everything to online purchases only. While this strategy can work for big companies like Adidas, there is no denying that spending habits have changed and that now, people are keeping their money for more essential reasons like food, shelter, and utilities.
As a result, Adidas saw a massive decline in net income in the first quarter of 2020. In fact, they only pulled in €20 million as opposed to the €631 million they did in 2019. Essentially, that is a 97 percent decrease that can be chalked up to the fact that around 70 percent of the company's stores are closed.
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"Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies," Adidas CEO Kasper Rorsted explained per Sole Collector. "I am proud of how our Adidas family has been working together to support both our company and our communities. 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-com. While we prepare for the return to a more normalized state of the business, we also remain realistic: Over 70 percent of our stores worldwide are currently closed."
Adidas has also admitted that these numbers could be reflected in Q2 as well, especially if stores don't open in the near future.
[Via]