Nike, Under Armor and more could face product shortages

The surge in buyer demand, coupled with a shortage of shipping containers and bottlenecks in ports, has already caused a tight supply of products, from cars to shoes. In particular, America’s biggest clothing and footwear sellers cite a catalyst that has escalated the pressure. Vietnam emerged from the second wave of coronavirus epidemics. As a result, brands from PacSun to Nike have warned of the impact on supply. In late December, Nike lowered its sales outlook for the full year due to supply chain issues, although CEOs pointed to strong consumer demand, with Nike accounting for about three-quarters of that. Nike manufactures shoes in Southeast Asia, 51% and 24% respectively in Vietnam and Indonesia, but the Vietnamese government is linked to the pandemic, including the forced closure of factories for several weeks from July to September. Matthew Friend, CEO of 10 Nike, said on a recent earnings conference call that he lost production in the weeks after the restrictions were imposed. According to company executives, half of Nike’s clothing factories in Vietnam are currently closed and Vietnam accounts for a third of the production of footwear and clothing for sports brand Under Armor. Armor CEO Patrik Frisk said on a recent earnings call in August that he was closely monitoring the impact of factory closures on the supply chain and called it a “situation in progress. development”. Mainly the American supplier of clothing and footwear. “We are a significant partner in the United States and the second largest source of clothing and footwear,” said Steve Lamar, president and CEO of the American Apparel and Footwear Association. Industrial group. According to the AAFA, China is the largest supplier of clothing and footwear. In July, Vietnam was caught in the midst of a coronavirus outbreak caused by suspected new variants of the virus. The government then imposed a strict blockade, temporarily closing the plant until mid-August, then extending it until September. Some factories are still closed. This means that production of everything from sneakers and sandals to jeans, dresses, T-shirts and jackets is stagnating. In a research note last month, BITG analyst Camilo Lyon said Nike and Adidas are at the greatest risk of serious supply chain disruption because “Vietnam has acted as a strong alternative to China in recent years “. He said it was expensive. Sportswear, coach’s parent tapestry, Capri Holdings (brand owner Michael Kors) Lyon estimates that it will take five to six months for the Vietnamese factory to recover and operate normally once the lockdown is over. .. And every time they come back online, he anticipates another problem: staffing. “Vietnamese factories will also struggle to get workers back to work after the lockdown,” he said. In an interview with CNN Business in August, PacSun president Brianee Olson said about 10% of products come from Vietnam and retailers are already facing delays of two to four weeks. paddy field. School inventories are rising this year as the global supply chain continues to fall behind. Now, new winter and holiday products can also face an additional four week delay, she said, making it difficult to get new fashions and styles. Olson said jeans, tops, sweatshirts and sweatshirts will be brought to stores in a timely manner, which will have an additional impact on consumers. Fewer items means retailers are taking discounts “because they don’t need them.” ..

With increasing demand from buyers, the shortage of shipping containers and bottlenecks in ports, the supply of goods, from automobiles to shoes, is already tight.

In particular, America’s biggest clothing and footwear sellers cite a catalyst that has escalated the pressure. This is a factory closure due to the appearance of the second wave of coronavirus in Vietnam. As a result, brands from PacSun to Nike began to warn of the implications of the offer.

In late December, Nike lowered its sales outlook for the full year due to supply chain issues, despite the CEO pointing to strong consumer demand.

Nike manufactures about three-quarters of its shoes in Southeast Asia, with 51% and 24% of its production, respectively, in Vietnam and Indonesia.

However, Nike said it suffered a 10-week production loss as the Vietnamese government imposed restrictions related to the pandemic, including the forced shutdown of the plant for several weeks from July to September.

Nike CFO Matthew Friend said on a recent earnings call that even if the factory does start to reopen, it is expected to be phased in from October, but by the time it reaches full capacity. production. He said it could take months. Half of Nike’s clothing factories in Vietnam are currently closed, company executives said on the call.

Vietnam accounts for a third of the production of footwear and clothing for the sports brand Under Armor. Armor CEO Patrik Frisk said on a recent earnings call in August that he was closely monitoring the impact of factory closures on the supply chain and called it a “situation in progress. development”.

Ugg, Coach and Michael Kors are on display

Vietnam is a major supplier, especially to the United States, of clothing and footwear.

“It’s a huge partner in the United States. It is the second largest source of clothing and footwear, ”said Steve Lamar, president and CEO of the American Apparel and Footwear Association, an industry group. According to the AAFA, China is the largest supplier of clothing and footwear.

In July, Vietnam was caught in the midst of a coronavirus outbreak caused by suspected new variants of the virus. Vietnam’s health minister said this has led to the rapid spread of new infections in industrial areas across the country.

The government then imposed a strict blockade, temporarily closing the plant until mid-August, then extending it until September. Some factories are still closed.

All of this means that production of everything from sneakers and sandals to jeans, dresses, T-shirts and jackets is stagnating.

In an investigative note last month, BITG analyst Camilo Lyon said that “Vietnam has been a powerful alternative to China in recent years,” which has enabled athletic shoe brands such as Nike and Adidas to have a serious supply chain. He said he was at the greatest risk of causing confusion.

Other brands with strong exposure in Vietnam include ugg makers Deckers Outdoor, Columbia Sportswear, the parent upholstery of Coach, and Capri Holdings, which owns the Michael Kors brand, he said.

Lyon estimates that it will take five to six months for the Vietnamese factory to recover and operate normally once the blockade is over. And every time they come back online, he anticipates another problem: the staff.

“Vietnamese factories will also struggle to get workers back to work after the shutdown,” he said.

Teen retailer PacSun expects an impact on the holiday season.

In an interview with CNN Business in August, PacSun president Brieane Olson said about 10% of the products come from Vietnam.

According to Olson, the retailer has already faced a two to four week delay in new semester inventory this year due to persistent delays in the global supply chain.

Now she says new winter and holiday products may also face an additional four week delay, making it difficult to bring in new clothes and styles of jeans, tops, sweatshirts. shirts and sweatshirts to the store in a timely manner. Said. Ways.

Olson said there would be more impact on consumers. Fewer products means retailers are taking discounts “because they don’t need them,” she said.

Nike, Under Armor And Others May Face Product Shortages Source Link Nike, Under Armor And Others May Face Product Shortages


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