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Consumer demand isn’t the issue – it’s getting products to the shelves on time, according to clothing retailer Lands’ End.
Shares of the retailer closed more than 9% lower on Thursday at $ 31.10. Although the company posted better-than-expected financial results in the second quarter, supply chain issues are making its outlook uncertain and driving down its stock price.
“You have countries that are important for manufacturing, like Vietnam. Right now you have southern Vietnam completely closed from mid-July to at least mid-September,” said Jerome Griffith, CEO from Lands’ End, in an interview on CNBC’s “Power Lunch”.
The plant closures are a result of the ongoing global pandemic and have made it difficult to accurately predict how the company will perform during the holiday season, Lands’ End said. American buyers have wanted to restock their closets, but getting them products isn’t always easy.
Lands’ End expects supply chain issues to weigh on profit margins in the second half of the year. Retailers have had to pay higher prices for goods amid strong consumer demand. Additionally, transportation costs are rising as retailers attempt to speed up receipt of orders.
Bottlenecks exist throughout the supply chain, Griffith said.
“You see factories finishing their products, not being able to reserve containers. Containers arrive on ships, but ships cannot enter ports. And once they get into the ports, a shortage of truckers driving cargo from the ports to wherever they need to go, ”he said.
The cost of shipping containers can be up to four times what it was a year ago, Griffith said.
Sometimes the higher costs can be offset by price increases, but this is not a guarantee.
“In a lot of cases, what’s going to happen across the industry is that it’s going to be passed on to the consumer,” Griffith said. Lands’ End has used artificial intelligence to predict where it can raise prices based on spikes in consumer demand.
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