Adidas, Nike And Under Armour Are Struggling With Production Snafus In Vietnam

Adidas, Nike and Under Armour are facing significant supply chain challenges with COVID-19 related closures in Vietnam, the second largest footwear supplier to the United States after China, continuing to hamper production.

Footwear factories, which were the first shut down in July, have remained closed for nine weeks straight. With the 2021 holiday season around the corner, these closures are proving particularly problematic for footwear and apparel brands.

According to a recent note from BTIG’s lifestyle and wellness analyst Camilo Lyon, brands such as Nike, Under Armour, Adidas, and Deckers Outdoor’s Hoka business are the most likely to sustain an impact from the shutdowns in the country.

“While the situation is fluid, we hear performance footwear has been suffering the most severe delays and is at increasing risk for cancellations for spring ‘22,” Lyon said.

Nike, for one, has seen significant production issues as the company’s suppliers shut down manufacturing for nearly two months. Previously, 51 percent of the company’s footwear and 30 percent of its apparel were produced in Vietnam. These challenges are pushing the company to look for production sites elsewhere, impacting its stability.

“While NKE typically is incredibly well-equipped to manage such disruptions, we fear this issue is just too large to control, even for the best-run athletic brand in the world,” Lyon said. “As such, we downgrade to neutral until better visibility is had around timelines for a return to normalized production and shipping schedules.”

Similarly, Adidas is moving its production outside Vietnam and is reportedly relying on airfreight for high-priced products.

Originally published at https://retailbum.com on September 23, 2021.