Sneaker Brands Financial Losses Due to Coronavirus

by: Tilda
April 18, 2020

The world is going through the hardest patch in 2020 due to the Coronavirus pandemic. Everyone is staying safe at home and acts of kindness all around us restored our hope in humanity. However, we can’t ignore the huge financial losses that a lot of companies are experiencing. But how hard is the blow on the business world generally and the sneaker brands specifically?

Sneaker Brands Financial losses Graphic

The Business World… On Hold!

Ever since the beginning of the Coronavirus spread in China, people anticipated financial losses as well as personal losses. However, when the virus spread outside of China, the losses increased exponentially. Now that most of the physical stores are closed, we should look at what the public is buying online. The industries that are all about outdoor activities and travel are actually suffering the most financial losses. On the other hand, some businesses are actually thriving after the lockdown. Some of these are the basic everyday item suppliers like groceries and hygienic items, indoor friendly activities like table tennis, and finally, work from home supplies!

Sneaker Brands Financial losses - graphs

How Is That Affecting All of Us?

Unfortunately, no one was ready for such a blow. Small businesses are mostly suffering, some had to lay off many of their employees to make ends meet. Even with governmental and community help, it’s getting harder to operate through the lockdown. 195 Million jobs are lost, and the number is growing. The pandemic affected more than 2.7 Billion workers worldwide! In turn, consumers are suffering the inability to access essential and basic goods.

There’s Always a Silver Lining

As we mentioned, people need E-commerce now more than ever. Amazon is one of the companies that have seen a boom in business after the lockdown. They already hired 100,000 new employees and opened up new 75,000 vacancies! Moreover, they raised the pay rates for all employees, in an act of support and gratitude for all the extra work they’re putting in.

Sneaker Brands Financial losses - amazon

Sneaker Brands Face Major Financial Losses

In light of everything that happened, the sportswear sector is taking a huge hit. The longer the lockdown, the bigger the financial losses. Although online shopping is still going on and actually growing bigger in some areas, we can’t ignore the fact that the supply and demand chain is disrupted. Especially with major entertainment, sports and political events being pushed back or canceled. This also applies to sports events and games all across the world. Actually, by March 21 sports apparel faced sales declines of around 60% to 90% depending on the type of sports. Now let’s dig a little deeper and see how big the financial losses of the sneaker brands are. 

Nike

The sportswear giant is expected to lose $3.5B by the fourth quarter of 2020. However, we gotta give it to them, they’re facing the COVID-19 financial losses in a very good way. The initiative they took by donating $15M+ to date and producing face shields earned them respect throughout the industry.

Sneaker Brands Financial losses - nike

During the Coronavirus outbreak, Nike is still operating through its apps and online. The company also made NTC Premium free to Nike members to help consumers stay active by working out at home. The result was an 80% increase in engagement and online sales jumped more than 30% in China. So all in all, Nike is one of the sneaker brands that are dealing fairly well with the crisis.

Adidas

There have been many ups and downs for the Three Stripes Brand. The most notable being recent news talking about a $3.3B loan from the German government and different banks. In addition to that, Adidas isn’t currently able to provide a financial outlook for 2020. But Adidas’ loss might not just be just on a financial level.

Sneaker Brands Financial losses - Adidas

The memory of the backlash for not closing on time and trying to wiggle their way out of rent payments is still fresh in people’s minds! And now, we’ve got this loan which people think should’ve been spent where it matters most: on health care and supporting those in need.

Reebok

Being Adidas’ subsidiary, the financial losses will undoubtedly hit both sneaker brands equally.

New Balance

New Balance is actually one of the first sneaker brands to start producing face masks to fight Coronavirus. It also donated $2M to organizations in different fields. However, there is no official statement about the financial losses they’re facing in the current situation.

Puma

Puma doesn’t see itself recovering from the losses in the short term, and that’s the hard truth.

Where Does the Sneaker Industry Stand Today?

The sneaker industry generally, is still standing its ground. After all, sneakerheads will always be sneakerheads and the love of kicks will never die down. However, the production became much slower than usual because most of it is located in China.

Sneaker brands financial losses - China production

Where Do Releases and the Resale Market Stand?

As we have seen in the last month, the release dates of many sneakers changed. That could be due to the fact that the production is slower, so the stock isn’t enough yet. Weirdly enough though, Yeezy releases didn’t change at all. But then again, Kanye never played by the rulebook, did he?

The resale market isn’t really affected by the Coronavirus crisis yet. However, StockX announced that they’re adding a 3% processing fee for buyers. That will be an addition to the already existing fee for users. This news received quite a backlash from users which most of them decided to go for different resale platforms like eBay. Meanwhile, eBay won over resellers by removing the 10% fee for North American resellers!

Finally, we pray that this crisis ends soon and we all resume our normal lives. Meanwhile, Stay home and safe.