Rawlins noted that because Designer Brands sells less workout apparel and performance footwear, such as running and basketball shoes, the company has fared better than some of its peers through the lockdown measures in Vietnam.
"It really is crazy, the roller coaster everyone has been on here." "When you think about the amount of effort everyone was putting into getting out of China, and now one of the only places where you can get the goods is China," Rawlins said. Some companies that moved manufacturing out of China and into Vietnam in the past few years - in a bid to diversify their supply chains and avoid tariffs - have gone as far as to say they are bringing production back to China.ĭuring a presentation with investors last week, Designer Brands Chief Executive Officer Roger Rawlins said he spoke to another industry CEO who told him that because of the slowdown in Vietnam, six years of supply chain work was undone in six days. The obstacles in Vietnam join a litany of other supply chain troubles, ranging from a shortage of cargo shipping containers to backlogged ports and a limited number of truck drivers. But the picture will likely grow bleaker as the holidays approach. It also delayed mailing fall catalogs.įor now, many businesses are watching and waiting to see how the restrictions and manufacturing activity will evolve. The manufacturing slowdown, coupled with longer transit times and heightened transportation costs, led RH to delay the launch of its contemporary furniture collection until next spring.
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It hopes to ramp up production to full capacity by the end of the year. The high-end furniture chain RH, meantime, has targeted a restart in southern Vietnam in October. Leggings maker Lululemon has said it anticipated factories in Vietnam would start a phased reopening in the middle of September. Some retailers have expressed hope the pressure will ease. Experts also note that restrictions in northern Vietnam have not been as stringent as rules in the southern part of the country. Under the restrictions, factories have been subject to rules that require them to either keep workers on site or completely suspend operations. On Monday, authorities announced a two-week extension of restrictions in Ho Chi Minh City, Vietnam's business hub and Covid outbreak epicenter. The difficulties have even made some companies reconsider decisions to move production out of China and into Vietnam. The risk has grown for a number of other retailers, which have been hampered by supply-chain delays as they wait for production facilities in Vietnam to get back up and running, according to recent comments to analysts and investors.
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