Anta Sports Sees Coronavirus Outbreak Impacting First-Half Results

Anta Sports Sees Coronavirus Outbreak Impacting First-Half Results

Anta Sports Products expects the coronavirus outbreak will impact its financial performance in the first half of 2020 but is aiming for a recovery in the second half, the Chinese company said in a stock exchange filing. Roughly 40 percent of the company’s stores in mainland China have re-opened.

The disclosure in this announcement does not include the business of Amer Sports Corporation, which was acquired last year.

Anta Sports said, “Since the outbreak of epidemic in January 2020, a number of provinces and cities in Mainland China have activated the highest-level response to major public health emergencies, the Level 1 Response, and adopted various stringent measures to curb the spread of the epidemic. The Board has been monitoring closely the epidemic and formulating responses after due consideration.”

On January 23, 2020, the company established “Anta Group Emergency Management Commanding Team for the Prevention of Epidemic.” Zheng Jie, an executive director of the company, serves as the leader of the emergency team and its members include Lai Shixian and Wu Yonghua, both executive directors of the company, and other members of the management team of the Group. Significant matters will be immediately reported to the emergency team for unified decision-making and the management team and various departments of the Group will coordinate to implement related measures.

Anta Sports said the Group has a sales distribution covering different provinces and cities in Mainland China. In order to promptly participate in the epidemic control and ensure the health and safety of employees and customers, the Group has followed the guidelines and requirements of relevant local government departments and temporarily closed some of the retail stores in certain areas.

As of February 14, 2020, nearly 40 percent of the stores in Mainland China of various brands have resumed operation. Meanwhile, “the Group adopted the arrangement for its home office for all employees and some crucial operations of the Group are also progressing online. In addition, the Group is actively promoting sales through e-commerce platforms and has achieved certain success in strengthening sales through such channels. The Group is closely monitoring the epidemic and further developments of related matters and apart from complying with the guidelines and arrangements of government and relevant health agencies, the Group will make decisions on the business resuming arrangements on the temporarily closed stores in accordance with the epidemic situation and local government’s policies. Meanwhile, the Group will closely communicate with distributors to follow closely their sales performance, review trade fair orders made in coming quarters in light of the actual situation as well as take appropriate measures to minimize any potential risk. In addition, as an enterprise with due consideration in its social responsibility, the Group was among the first batch of enterprises to donate to the fight against the epidemic in China with a donation of RMB10 million to China Charity Federation on 25 January 2020. On February 13, 2020, the Group further donated RMB20 million worth of winter outfit and relevant supplies to support medical staff in the front line of the battle against the epidemic.

“The Group’s in house factories suspended their operation for two weeks in accordance with government regulations after the Lunar New Year holidays, and will gradually resume operation next week. However, due to the suspension or limited services of transportation facilities in certain areas, some employees in the affected provinces and cities, especially those in the Hubei region, are still unable to return to the production units as planned. As a result, the productivity of the Group’s in house factories could not achieve a normal level and it is expected to take certain time to resume operation. However, it is estimated that the impact of the government’s measures on the epidemic could be temporary, and the Group primarily relies on outsource production,” said the release.

Based on the information in the Interim Report 2019, the self-produced footwear and apparel products of the Anta brand accounted for only 34.4 percent and 11.9 percent of total quantities, respectively. The Group will actively coordinate production capacity with OEM product suppliers to adjust its in house and outsource production arrangement to reduce the impact on product supply.

Anta Sports said it is “closely monitoring the market situation and continuously evaluating the impact of the epidemic on the Group’s operation and financial performance.”

The Group estimates that under the current special circumstances the industry and financial performance of the Group will inevitably be affected by the epidemic in the first half of 2020 and expects the recovery will come in the second half of 2020 at the soonest. Nonetheless, the management believes that the Group and its management and employees will continue to work as a whole manage the situation and use “our best effort to contain the impact of the epidemic on the Group. Meanwhile, the Group will strengthen cost control and adopt appropriate measures in a timely manner, and will also issue further announcements when appropriate,” said Anta.

“The Group believes that the public will continue to pursue health and hygiene in growing demand and the foundation of the industry remains solid, the Board and the management still have full confidence in the long-term development of the Group,” said Anta.