Investors were pulling out of Nike on Monday (Sep 13) as BITG reported that supply chain challenges in Vietnam could affect the production of 160 million pairs of Nike shoes.
In July, Nike announced that their manufacturing facility in Vietnam was shut as COVID-19 infections were spreading through facilities and communities.
Soon after, companies like Adidas, Yeti, and RH cited that the disruption in Vietnam manufacturing hub will be a key challenge moving into the holiday shopping season.
In Nike’s case, it has been two months now without any production in its Vietnamese factory. The factory accounted for 51% of footwear and 30% of apparel units last year.
It is estimated that Nike has lost 40 million pairs of shoes a month due to the production halt. Analysts are predicting that the number will rise up to 160 million pairs of shoes in coming months.
Even after factories resume operation, analysts are anticipating a slowdown due to social distancing and the time it takes to ramp production back up. It could take up to six months before factories are back to normal, and that includes eight weeks to work through the backlog.
