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Nike could run out of sneakers made in Vietnam following COVID spike: S&P Global

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According to a new analysis from Panjiva, the supply chain research unit of S&P Global Market Intelligence, Nike (NKE), may run out of Vietnamese-made sneakers due to a halt in production at three Vietnamese plants due to rising COVID-19 infections in the region.

Vietnam is crucial to Nike’s supply chain. Panjiva data shows that products made in the country account for 49.0% of U.S. seaborne imports linked to Nike and its products in the second quarter of 2021. Nike footwear imports from Vietnam were included in 82.0% of shipments in the 12 months to June 30 after climbing 28.8% in the second quarter of 2021 versus a year earlier.

A statement from Nike given to Yahoo Finance says that the sportswear giant is committed to the wellbeing of its employees and that the company believes that it can maneuver around the current supply chain challenges.

“The health and safety of our teammates, as well as that of our suppliers, remains our top priority. We continue to work with our suppliers to support their efforts in response to the dynamic and unprecedented nature of COVID-19,” the statement 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," the statement continued. 

On July 18, Vietnamese officials in the capital of Hanoi encouraged citizens to stay home for the start of the workweek due to new pockets of infections. All non-essential services were also halted in the city and indoor restaurants, gyms, and salons.

HO CHI MINH CITY, VIETNAM - 1997/08/01: Workers in a Nike factory near Ho Chi Minh City work at a production line conveyor belt, putting together Nike sports shoes.. (Photo by Peter Charlesworth/LightRocket via Getty Images)
HO CHI MINH CITY, VIETNAM - 1997/08/01: Workers in a Nike factory near Ho Chi Minh City work at a production line conveyor belt, putting together Nike sports shoes.. (Photo by Peter Charlesworth/LightRocket via Getty Images)

Nike, however, may not be the only shoe manufacturer susceptible to a slowdown in Vietnamese production, as many companies produce its footwear in the region. Wolverine World Wide Inc. (WWW), owner of the Saucony brand, and Puma (PMMAF) had the most significant Q2 increase of Vietnamese imports at 160.7% and 122.7%, respectively, according to the report.

A Panjiva analysis of the U.S. Census Bureau data shows that supply chain activity is lagging as leisure items and apparel retail sales continue to boom in June. Total retail sales climbed 18.5% year over year, and sales excluding autos and fuel rose 16.1%.

According to the analysis done by S&P Global Market Intelligence Contributor Christopher Rogers, the fastest growth rate came in sports and leisure goods, which rose 41.5%. E-commerce sales also climbed 38.3% in June, up from 26.3% in May.

Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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