With more than 70 percent of its global stores still shut this week, Adidas is in the midst of reshaping its business model with strategies for a “new normal.” Those actions: Repurposing and liquidating existing inventories; accelerating a focus on digital as the Three Stripes eyes surpassing 4 billion euros in FY20 channel revenues; and establishing a task force to identify traffic and sales opportunities.

Faced with first quarter COVID-19 fallout in Greater China, where revenues fell 58 percent and product takebacks were in triple-digit millions of euros, Adidas realized a 97 percent decline in net profit and 19 percent decline in overall revenues to the equivalent of $5.15 billion for the period ended March 31. Sport performance sales were off 20 percent; sport-inspired product sales were down 16 percent. Overall second quarter results are currently projected to be worse than in the first quarter, a likely net loss from a more than 40 percent year-over-year drop in currency-neutral sales.

With the Greater China market open again and projected to return to double-digit growth in the second half of the year, Adidas intends to apply lessons learned there elsewhere as other global markets gradually open again in May and June.

The company’s inventory strategy includes “proactive order management” to align deliveries with lower demand and repurposing and liquidating existing inventories. Already facing some cancelations of second and third quarter orders, most centering in September and October, Adidas intends to fulfill its fourth quarter supply needs with those products. And beyond shifting distribution of some evergreen products into 2021, the company will utilize its own factory outlets, e-commerce channels and wholesale partners to liquidate other excess inventory.

Meanwhile, Adidas will aim to reach its annual digital revenue target by prioritizing the channel within its supply chain, reallocating existing inventory to the channel, shifting marketing investments to digital vehicles, moving resources to drive online conversion rates and accelerating app drop initiatives. E-commerce sales rose 35 percent in the first quarter, including a 55 percent increase in March.

North American revenues, which were up 1 percent in the first quarter despite a double-digit increase through Feb. 29, are projected to decline in the second quarter given the store closures prompted by the pandemic.

“Despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas,” CEO Kasper Rorsted said in a statement. “Consumers are developing an increased appreciation of well-being. They want to stay fit and healthy through sports. Our focus on accelerating our own-retail and digital business will serve us even better in the future.”

Later, Rorsted told analysts, “While we see 2020 being a very painful year… We do believe that the underlying trends are equally good or even better in the medium-term. We have to get to the medium-term, and that’s what we are getting ourselves through.”