By Thomas J. Ryan
Over 70 percent of sports and fitness manufacturers and businesses reported a sales drop of over 25 percent for the month of April as most of the country’s stores were closed to prevent the spread of the coronavirus, according to a survey of industry participants by the SFIA. But the survey indicated aggressive steps are being taken to minimize the damage with some improvement expected in the back half.
The survey, taken between May 11 through May 18 with a total of 228 respondents, showed 85 percent saw declines in April. Of that, 55 percent reported sales decreases of 51 percent or greater and 30 percent were down greater than 75 percent.
Not much improvement was expected in May as stores have only begun to re-open and customers are only slowly returning. Eighty-three percent expected declines, of which 64 percent saw a drop of more than 40 percent.
For the full-year, 30 percent of respondents were already expecting revenues to fall more than 40 percent. But comparing figures to April and May’s findings indicates that some recovery is expected in the back-half.
Thirty percent of respondents expect a revenue decline between 21 percent to 40 percent in 2029 with 21 percent seeing a slide between 1 percent and 20 percent. Seven percent expect to see flat sales in 2020 and 11 percent to see an increase.
Asked what actions their company had taken in response to drops in revenue, the top response was furloughed staff, cited by 45 percent; followed by reduced staff salaries, 44 percent; layoffs, 42 percent; and reduced staff hours, 40 percent. Twenty-two percent said their company had seen a drop in revenue but had not taken any of those steps.
The survey found that bigger companies with more employees were more likely to furlough, layoff or reduce pay of their staff, possibly because many operate stores.
For instance, of the respondents with greater than 500 employees, 76 percent underwent furloughs versus 27 percent for companies with one to 25 employees.
Asked if they’re applying for an SBA loan or other government-related relief program, 58 percent said they were, 21 percent indicated they weren’t and 21 percent said they were ineligible for a loan.
Of those that applied, 76 percent of sports and fitness companies received some form of government-related financial relief. Fifteen percent said they applied for an SBA loan, or other government-related financial relief, but had not heard back yet. Eight percent said their company applied for an SBA loan or other government financial assistance, but their application was rejected.
Other insights from SFIA’s survey:
- E-commerce — Many industry players did not see a big boost to online sales in April despite many stores were closed amid lockdowns. Twenty-six percent of respondents indicated that their online sales had expanded more than 25 percent, but 30 percent indicated that their online sales were down more than 25 percent. Overall, 33 percent saw online gains in April, five percent were flat, 45 percent saw declines and 19 percent do not have online sales.
- Supply chain disruptions — Eighty-one percent indicated that they experienced disruptions in their supply chain, but the survey showed minimal impact for most. Asked if they’re experiencing any delays at their distribution or fulfillment centers, only 10 percent said, “Yes, significant delays,” with 44 percent indicating, “Yes, moderate delays.” Twenty-six percent said they were not experiencing any delays. The question was not applicable for 21 percent of respondents.
- Return of gyms — Asked when they think gyms, health clubs, and boutique fitness centers will open, the majority felt the next one to three months. Twenty-three percent indicated the May to June time period, 40 percent between July and August, and 24 percent between September to October. Only 8 percent felt 2021 or later.
- Return of team sports — More skepticism was seen on the comeback of sports. Only 10 percent saw team sports returning during the May-to-June period, 31 percent between July and August, and 36 percent between September and October. Twenty percent felt 2021 or later.
The April COVID-19 Industry Impact survey is the first in a series of monthly surveys compiled by the SFIA exploring how COVID-19 is impacting the sports and fitness industry. To download the full SFIA COVID-19 Industry Impact Report, April 2020, click here.
Photo courtesy Getty