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Nike could face a sneaker shortage because of COVID-19 in Vietnam

Two of its suppliers have shut down their factories.

PARIS, FRANCE - JULY 05: A guest wears a beige with black and red checkered long oversized coat, a burgundy and red silk flowing dress, a black Chopard shopping bag, black and white leather sneakers from Nike, outside Dior, during Paris Fashion Week - Haute Couture Fall/Winter 2021/2022, on July 05, 2021 in Paris, France. (Photo by Edward Berthelot/Getty Images)
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Nike could soon face a shortage of sneakers, as two of its suppliers in Vietnam have had to cease operations because of COVID-19. The country is currently dealing with its worst outbreak of the virus, with daily records for infections and a new variant emerging. Until April, Vietnam had been successful in containing the coronavirus.

The two suppliers, Changshin Vietnam and Pou Chen Corp, have both shut down factories because of infection rates in their surrounding areas, according to a report from Reuters. Most of the country’s cases have been in the commercial hub Ho Chi Minh City, where both companies have Nike factories, and the neighboring industrial provinces.

“Having the factories shut for one or two weeks for Nike is going to cause a massive problem for its supply chain," China Market Research Group analyst Shaun Rein told Reuters. He also said the shutdown could lead to price hikes.

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The majority of Nike shoes come from Vietnam — Nike said approximately 50 percent of its footwear came from Vietnam in fiscal 2020. Overall, the country has accounted for 49 percent of Nike’s imports into the United States in the second quarter of 2021, according to S&P Global.

In June, prior to the factory shutdowns in Vietnam, Nike CFO Matthew Friend said the company “expects supply chain delays and higher logistics costs to persist throughout much of fiscal ‘22.”

Nike told Footwear News in a statement: “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 added, “We are confident in Nike’s ability to navigate these near-term dynamics and we remain prudent in our planning.”

How exactly supply issues will impact the consumer remains to be seen. The southern region of Vietnam began a two-week lockdown Sunday, and any extensions could see the product shortage grow worse.