Nike could run out of shoes from Vietnam as Covid worsens: S&P Global

Nike is at risk of running out of sneakers made in Vietnam as the Covid crisis worsens around the world, according to a new report from S&P Global Market Intelligence.

The warning comes after two of Nike’s suppliers in Vietnam, Chang Shin Vietnam Co. and Pou Chen Corp., recently halted production, due to a rapidly growing Covid outbreak in the region. In FY2020, Nike said contract factories in Vietnam manufacture around 50% of total Nike-branded footwear.

A new analysis from Panjiva, a business arm of S&P Global Market Intelligence, found that Vietnam accounted for 49% of U.S. maritime imports related to Nike and its products in the second quarter of 2021.

Nike’s imports from Vietnam are dominated by footwear, said Panjiva, which made up 82% of shipments in the 12 months ended June 30.

A representative for Nike did not immediately respond to CNBC’s request for comment.

Nike shares were down around 1.5% at the start of the session. The stock is up about 13% year-to-date. Nike has a market capitalization of $ 250 billion.

The disruption hits Nike’s supply chain and others as the retail industry heads into the all-important back-to-school season. Businesses have probably already received and stored merchandise on shelves until the fall, but that’s when many businesses would be placing orders for the holidays. Other obstacles, including a shortage of freight containers and lack of space in ports, have disrupted supply chains in recent months.

Brooks Running Company CEO Jim Weber told CNBC late last month that his business was operating on a shipping cycle of around 80 days, down from just 40 days previously.

“There is no doubt that the supply chain is very extensive in our industry,” he said.

Clothing brands including Levi Strauss and H&M are facing similar headwinds in Bangladesh, which is home to a number of major garment manufacturing centers.

Department store chain Nordstrom faces delays amid its biggest annual sale.

In a conference call with analysts after the results last month, Nike CFO Matt Friend said the company expected supply chain delays and higher logistics costs to persist for a long time. part of its 2022 fiscal year. Consumer demand has, in many cases, exceeded supply, he said. mentionned.

This means that consumers could most likely find limited choices, or see some items totally out of stock, when they hit stores or go online to shop in the coming months.