Nike (NYSE: NKE) is facing a potential supply shortage as Covid-19 infections rise throughout Southeast Asia, according to a report from S&P Global Market Intelligence. The news follows the recent temporary closure of two of the company’s suppliers in Vietnam, Chang Shin Vietnam Co. and Pou Chen Corp. amid a Covid outbreak in the sector.
The company reported that contract factories in Vietnam had produced about 50% of its total branded footwear in fiscal 2020. Furthermore, an analysis from Panjiva, a division of S&P Global Market Intelligence, highlighted that Vietnam accounted for 49% of U.S. seaborne imports associated with Nike and its goods during the second quarter of 2021.
According to a report written by Christopher Rogers, senior researcher at Panjiva, the disruption “may exacerbate the supply chain disruptions that [Nike] has had to deal with.”
Footwear accounted for 82% of Nike’s imports from Vietnam in the 12 months ended June 30.
A Nike spokeswoman told CNBC that “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,” she 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.”
Nike shares fell 1.3% Monday but have risen 11.5% year to date. The company’s market cap is approximately USD250 Billion.