The toll from COVID-19 on the apparel sector has been widening. Both Adidas AG and Puma SE have flagged significant store closures in China resulting from reduced customer activity, the Financial Times reports. That follows similar commentary from Under Armour Inc., as outlined in Panjiva's recent research, with the eventual impact uncertain until it becomes clear when the virus' spread will slow.

Most apparel and footwear firms face a potential double impact from the virus. On top of losing sales in China, there is the potential drag to global supply chains resulting from reduced factory activity.

All three companies have a similar exposure to China in terms of downstream supply chains to the U.S. Panjiva's seaborne import data shows that 9.6% of shipments linked to Adidas came from China in 2019, while for Puma, the figure was 9.0%. Under Armour was slightly higher at 14.6%.

A bigger issue for all three would be an interruption to supplies from Vietnam, the No. 1 source for all three companies. The country represented 41.4% of Adidas shipments, 28.8% of Puma's and 26.9% of Under Armour's. The threat may come, of course, from issues outside of coronavirus — in particular, any decision by the U.S. government to turn its attention to countries that have significant and expanding trade surpluses with the U.S.

The supply chain challenge has emerged just as the industry appears to be having wider problems. U.S. seaborne imports of apparel and footwear declined 13.8% year over year in January after a slide of 11.3% in the 2019 fourth quarter.

Imports linked to Adidas have seen a similar performance with a 13.3% year-over-year slide in January following a 21.6% drop in the fourth quarter. Puma has performed much better with an 11.5% surge in January after a 14.3% rise in the fourth quarter. Under Armour has outperformed Adidas but lagged Puma with shipments that increased 5.7% in January after a 12.3% rise in the fourth quarter.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.