Puma chief puts brave face on coronavirus retail crisis

Bloomberg

Puma SE’s chief executive officer put a brave face on the coronavirus crisis in China, forecasting a 10% gain in revenue this year.
“Long-term, this will not have an impact on our industry and our brand,” CEO Bjorn Gulden told journalists. “Can we reach the guidance or not? We will do everything we can.” Puma shares surged as much as 9.5% to a record, erasing a recent slide. Rival sportswear maker Adidas AG painted a bleak picture, saying business in greater China dropped 85% 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% of its sales. Chinese authorities have taken drastic measures to contain an outbreak that has claimed more than 2,300 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.
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.