Nike, Gap, Urban Outfitters and other retailers are warning lockdowns in Vietnam are wreaking havoc on supply chains

Nike, Gap, Urban Outfitters and other retailers are warning lockdowns in Vietnam are wreaking havoc on supply chains

Clothing companies are having a hard time meeting customer demand amid strict lockdowns in Vietnam. TOLGA AKMEN/Getty Images

Vietnam is under a strict lockdown as COVID-19 cases continue to rise around the country.

Clothing brands like Urban Outfitters and Abercrombie & Fitch say these lockdowns are hurting the supply chain.

The coffee industry is also taking a hit, because Vietnam is the second largest supplier of coffee beans.

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Clothing companies are having a hard time meeting customer demand amid strict lockdowns in Vietnam as COVID-19 continues to spread, Axios first reported.

Vietnam is a huge manufacturer for many American clothing brands, and as the virus continues to spread, companies are having trouble getting inventory in stock to keeping up with the demand for clothes now that restrictions have been lifted in the US.

“I would say our biggest concern right now is actually getting the inventory,” Richard Hayne, CEO of Urban Outfitters said in an earnings call Tuesday. “Not when it’s going to come in, or how much it’s going to cost. We are – we have a situation in Vietnam. I’m sure other people have the exact same situation where the country is completely closed.”

Vietnam had fewer than 2,000 cases prior to July of this year, but has since reported numbers topping 10,000 since the beginning of August, according to data from Our World Data.

Some of the biggest brands in the US get most of their goods from Vietnam, according to data from Bank of America. “Gap and Lululemon Athletica each source about a third of their production from Vietnam,” the bank’s analysts found. Nike sources 51% of its footwear and 30% of its apparel from the country," Axios says.

With strict lockdowns underway, it’s become very difficult for brands to get the clothes they need.

“On the supply chain constraints, yeah, I’d say right now, it’s tough out there,” Scott Lipesky, Executive Vice President and CFO at Abercrombie & Fitch said in an earnings call Thursday. “All the articles you read are real and we’re all – those of us on this side of the fence are living through it every day.

But, the clothing supply chain isn’t the only industry taking a hit. Vietnam is the second-largest supplier of coffee beans in the world, and as the country remains under lockdown the supply chain is struggling to keep up with demand.

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Nordstrom, Urban Outfitters Fall Premarket; Dick’s Sporting Goods Rises

By Peter Nurse

Investing.com — Stocks in focus in premarket trade on Wednesday, August 25th. Please refresh for updates.

Nordstrom (NYSE:JWN) stock fell over 11% after the department store chain’s quarterly revenue declined 6% from pre-pandemic levels, with the company flagging supply chain issues and stiff competition.

Urban Outfitters (NASDAQ:URBN) stock fell 5.4% after the retailer issued disappointing guidance for the quarter, citing higher input costs and lower wholesale sales. Its second-quarter figures were however largely better than expected, helped by strong digital sales.

Johnson&Johnson (NYSE:JNJ) stock rose 0.5% after the drugmaker said its Covid vaccine booster shot generated a promising immune response in early trials.

Dick’s Sporting Goods (NYSE:DKS) stock rose over 11% after the outdoor equipment retailer beat expectations for quarterly earnings, announcing a 21% increase in its regular quarterly dividend as well as a special dividend.

Shoe Carnival (NASDAQ:SCVL) stock rose 2.3% after the retailer more than doubled the Street’s profit expectations for the second quarter.

Toll Brothers (NYSE:TOL) stock rose 2.1% after the luxury home builder reported a record for new contracts on the quarter, exceeding the third quarter of last year by 35%.

Campbell Soup (NYSE:CPB) stock fell 1.2% after Piper Sandler downgraded its stance on the food processing company to ‘neutral’ from ‘overweight’, saying commodity inflation will weigh on its bottom line.

Boston Beer (NYSE:SAM) stock fell 3.7% after Cowen downgraded the brewery to ‘underperform’ from ‘market perform’, saying the hard seltzer boom seems to be slowing significantly.

Express (NYSE:EXPR) stock rose 5% after the apparel retailer posted a surprise profit in the quarter, stating that it was on track to reach $1.0 billion in e-commerce sales by 2024.

Cassava Sciences (NASDAQ:SAVA) stock fell over 22% after a “statement of concern” was posted overnight questioning the “accuracy and integrity” of trial data for its treatment of Alzheimer’s disease. Cassava has responded, releasing a statement rebutting the claims.

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Urban Outfitters to exit Chinese market in September

It has been a busy week for retailer Urban Oufitters, reporting stellar sales figures, a new re-sale platform and the latest, its exit from the Chinese market.

The Anthropologie-owned company said it was cease trading in China when it closes its Alibaba platform Tmall store on 12 September, when it would remove all its online products. Its customer service will remain available until 24 September.

The company said on its Weibo account that it would exit China as part of a new global strategy, and that the closing of its stores would be temporary, although a new date was not provided. Urban Outfitters currently has 1.14 million followers on its online Tmall store.

The Business of Fashion reported that “international mass market brands face serious challenges in China. Asos, New Look, Topshop and Old Navy have exited the market, C&A sold its China business last year, Bershka, Pull & Bear and Stradivarius, three Inditex brands, closed all of their physical stores and Mango has announced a moratorium on opening new stores. Meanwhile, H&M’s China sales fell 32 percent in the second quarter.”

Earlier this week Urban Outfitters CEO warned of trade disruptions and shipping delays of products from Asia to the U.S. and Europe. Richard Hayne told Bloomberg “our biggest concern right now is actually getting the inventory, not when it’s going to come in or how much it’s going to cost.” The Philadelphia-based company said it would ship goods via air freight, a more costly but reliable route to ensure products are delivered to its retail network in time for the autumn and Christmas peak.