Coats takes $8m sales hit in China on coronavirus

Thread maker Coats said sales in China had fallen by $8m in the first two months of 2020 after enforced shutdowns of its factories due to the coronavirus epidemic.

The company has four factories in China from where it derives 12% of group sales. All were closed in the Chinese New Year and Coats said they were now operational and forecast full capacity by the end of March.

“China remains important to the wider apparel and footwear supply chain, producing around 40% of the world's garments and footwear,” Coats said.

“Looking forward we face uncertainty around the impact of the virus on the industry supply chain, both inside and outside of China. We will continue to monitor the situation carefully and respond as necessary.”

Annual profits rose, despite lower growth in retail sales in its apparel and footwear division.

The company on Thursday said adjusted operating profit rose to $198m from $195m a year earlier. Reported revenue fell to $1.389bn against $1.41bn due to foreign exchange headwinds in the first half.

Coats said absent a material impact from the covid-19 coronavirus it remained “well placed to execute our strategy and deliver another year of growth in 2020”.