Puma SE’s chief executive officer put a brave face on the coronavirus crisis in China, forecasting a 10 per cent gain in revenue this year.
“Long-term, this will not have an impact on our industry and our brand,” CEO Bjorn Gulden told journalists Wednesday. “Can we reach the guidance or not? We will do everything we can.” Puma shares surged as much as 9.5 per cent to a record, erasing a recent slide.
Rival sportswear maker Adidas AG painted a bleak picture, saying business in greater China dropped 85 per cent in the weeks since January 25. Puma’s Gulden looked past the gloom even as the company wrestles with store closures in a market that accounts for 13 per cent of its sales. Chinese authorities have taken drastic measures to contain an outbreak that has claimed more than 2,000 lives.
Chinese employers have encouraged people to stay home, shopping malls and restaurants are empty, and amusement parks and theatres are closed. Non-essential travel is all but forbidden.
Piral Dadhania, an analyst at RBC Capital Markets, said Puma’s surprising discounting of the virus in the early months of the year may point to a strong order book for the second and third quarters.
“Long-term, this will not have an impact on our industry and our brand. Can we reach the guidance or not? We will do everything we can.”– Puma CEO Bjorn Gulden
As many as 70 of Puma’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.
Many consumer goods companies point to e-commerce to sustain the effect of the store closures. Orders are in, according to Puma’s Gulden, but they can’t be fulfilled due to the travel restrictions.
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.
Puma has pushed to re-open its own stores as soon as possible, even if there are no customers. That’s the case in Shanghai, where traffic is “very, very low” in Puma’s two open outlets, according to Gulden.
“We think it’s important to show that when you can open, you open,” he said.
Both Puma and Adidas pointed to weaker performance elsewhere in Asia. Adidas said in an email that it had observed some traffic declines in Japan and South Korea, but not “a major business impact.”
Adidas shares rose 1.8 per cent in Frankfurt. Before the virus hit, business had performed strongly in China, the company said.