Consumers will have their choices limited, or see some items totally out of stock.
As coronavirus cases increase across Southeast Asia, footwear production in the region is being impacted — and Nike is feeling the burn, according to reports.
Two Nike footwear suppliers in Vietnam — Chang Shin Vietnam Co. Ltd. and Pou Chen Corp. — have stopped manufacturing, Reuters reported late last week. The southern region of Vietnam went on two-week lockdown starting at midnight on Sunday given a record coronavirus case count in the country.
Companies had begun to shift their manufacturing to Vietnam and other countries in recent months due to issues like tariffs and the pandemic, hoping to diversify their supply chain away from dependence on China.
A new analysis from Panjiva, a business line of S&P Global Market Intelligence, found Vietnam accounted for 49% of U.S. seaborne imports linked to Nike and its products in the second quarter of 2021. However, Panjiva notes that Nike has been turning back to China, with imports from the region up 54.6% in the second quarter.
“Across the total marketplace, we continue to see strong retail sales growth and consumer demand for our brands exceeding marketplace supply, with marketplace inventory down double digits versus the prior year,”
said Matthew Friend, Nike’s chief financial officer, on the fiscal fourth-quarter earnings call.
Despite supply chain issues, Nike in late June reversed its quarterly loss and posted net income of $1.5 billion, or 93 cents a diluted share. Revenues in the quarter totaled $12.3 billion, nearly doubling from a year ago. Shares in Nike jumped to record highs as a result.