The sporting goods industry severely affected by the COVID-19 crisis

Article From：FESI

 

Companies are in urgent need of liquidity and cash flow support according to the latest FESI survey

Today, FESI is unveiling the results of a flagship survey conducted among its members to assess the impact of the current COVID-19 crisis on the sporting goods industry. The survey shows that the entire sporting goods sector is strongly impacted by the COVID-19 outbreak with 45% of the companies declaring a loss of turnover ranging between 50% and 90% since the beginning of the crisis. A new broader survey exercise examining the effectiveness of economic and policy responses for the sector will be conducted shortly.

 

The survey[1] published today was conducted among FESI members – companies and national federations (including members of our national federations) – in order to gather their views and experience of the impact of COVID-19 on their businesses. This survey collected responses from a critical mass of the sporting goods industry. Manufacturers and retailers over a geographical area covering the main outbreaks of the epidemic in Europe participated in this exercise. The respondents are composed of 40% of large enterprises (more than 250 employees), 30% of SMEs (between 10 and 249 employees) and 20% of micro-enterprises (less than 10 employees).

 

Not surprisingly the results show most clearly that the entire sporting goods industry is severely impacted with a dramatic impact on turnover ranging between 50% and 90% for almost half of the companies. “The closure of brick and mortar stores all over Europe and internationally, as well as changes of consumers’ behaviour lead to serious drop of sales. Most of our companies are currently struggling to cope with fixed costs (rent, employment costs…), which create significant liquidity shortages”, declared Neil Narriman, FESI President. While national governments and the European Union have put in place economic rescue plans to financially support those affected by the crisis, for some companies the support of the financial sector is not yet fully sufficient.

 

The results of FESI’s survey also indicates that the current impact of the outbreak on production depends on a wide variety of factors such as: Governments’ social distancing measures, the evolution of the virus in each country, orders’ cancellations from other clients, and the overall clear lack of short- and long-term visibility for the companies. “In the short term, the sporting goods industry needs strong measures from national governments to address the current liquidity gaps and strengthen their cash flows,” commented Jérôme Pero, Secretary General of FESI. “But it is crucial to also start preparing gradual longer-term strategies now, in order to re-launch the economy sustainably in a safe and coordinated manner once the crisis is over”, he added.

 

Regarding e-commerce, the survey demonstrates once again that digitalisation is a key driver for the sporting goods industry and that companies with efficient omni-channel retail strategies are better equipped to cope with the crisis. However, the compensation provided by having an e-commerce website remains relatively low compared to the total losses: between 0% and 20% for 85% of the respondents.

 

Since the beginning of the crisis, the sporting goods industry has mobilised and adopted a series of solidarity initiatives[2] to help communities across Europe and the world cope with the crisis. 35% of the respondents to FESI’s survey indicate that their company is producing personal protective equipment

 

(PPE) such as medical masks. 25% have implemented initiatives to encourage physical activity and social distancing, either within their company or through free public access programs/applications.

 

FESI has shared this report with the European Commission and now stands at its full disposal to discuss these results and to reflect together on concrete and useful proposals for the economy and the survival of the sporting goods industry. This survey exercise will be regularly repeated and extended to all members of FESI’s national associations in nearly 12 countries, in order to provide stakeholders with the most up-to-date data. In the next edition of its survey, FESI will also ask its members to provide information on the effectiveness of some of the support measures at EU and national / local level, in order to collectively identify the successful measures that should be focused on and perhaps be integrated in a best practice playbook at EU level.