Nike might soon be selling the last lot of its sneakers made in Vietnam, S&P Global Market Intelligence has warned.
Two of the company’s Vietnamese suppliers, Chang Shin Vietnam Co. and Pou Chen Corp., have halted production due to a worsening covid outbreak in the region. The closures are likely to have a significant impact on Nike’s supply chain in the months ahead, as roughly 50 percent of Nike footwear branded shoes were produced in Vietnam as of 2020.
In Q2 this year, Vietnam accounted for 49 percent of U.S. seaborne imports linked to Nike and its products. Moreover, 82 percent of Nike shipments from Vietnam in the last 12 months were footwear, according to Panjiva, a business line of S&P Global Market Intelligence.
“The health and safety of our teammates, as well as that of our suppliers, remains our top priority,” a Nike spokeswoman told CNBC in an emailed statement.
“We continue to work with our suppliers to support their efforts in response to the dynamic and unprecedented nature of Covid-19,” she said. “As we continue to navigate these circumstances, we expect our suppliers to prioritize the health and livelihoods of their employees and continue to comply with legal requirements and the Nike Code of Conduct on the provision of wages, benefits and severance. We are confident in Nike’s ability to navigate these near-term dynamics and we remain prudent in our planning.”
These supply chain issues come right as the retail industry is gearing for the all-important back-to-school season and is starting to prepare for the 2021 holiday season.
On a post-earnings conference call last month, Nike CFO Matt Friend noted that the company was expecting supply chain delays and higher logistics costs to persist well into 2022, especially as consumer demand continues to outstrip supply.
For consumers, this could mean seeing more products out of stock or having a limited choice.