Bags / Shoes & Accessories

According to a research report sent to customers by analysts at BofA Securities over the weekend, the impact of factory shutdowns in Vietnam may be more severe than planned by many apparel and footwear retailers. Analysts said that the recovery there is slower than expected, and companies are too optimistic about the time required for the recovery period, and the negative impact may continue until 2022.

u3000u3000The reasons why Bank of America made this forecast include that Vietnam’s southern region, where many clothing and footwear manufacturers gather, has reopened its economy much more slowly than the northern region.

u3000u3000 In July and August last year, the number of confirmed cases of the new crown in Vietnam surged, triggering another round of blockade. The temporary suspension of production at the factory has dealt a blow to companies such as Adidas and Nike, which rely heavily on the region to produce sneakers and sportswear. The Bank of America pointed out that although the business has restarted since then, the vaccination rate is still far lower than in other countries.

u3000u3000 Bank of America economist Mohamed Faiz Nagutha said: “Production activities did recover quickly after a brief interruption due to the epidemic last year, but this time it may take a long time to return to normal - maybe 6 months.”

He added that the current operating regulations of the Vietnam factory are still very strict and very complex, which may hinder the rework of personnel: "In short, the expectation of rapid recovery of production activities is expected to encounter unfavorable factors-including labor shortages are likely to continue... but It’s also because of rising raw material costs and supply chain disruptions in many other parts of Asia.”

u3000u3000 Sportswear and footwear brand Puma (Puma) has warned that bottlenecks in the supply chain, especially in Vietnam, will result in a shortage of products next year. Last week, Adidas lowered its outlook for 2021 on the grounds that procurement was interrupted.

Companies including department store chains Kohls and Macys, chain retailers Walmart and Target, and major shopping mall brands Victorias Secret and Foot Locker will all announce earnings this week. This topic may appear on their phone calls. Dharma talks at the meeting.