Consumer demand isn’t the problem – it gets products on shelves on time, according to clothing retailer Lands’ End.
The retailer’s stock closed more than 9% at $ 31.10 on Thursday. Although the company achieved better-than-expected results in the second quarter, supply chain issues are making its outlook uncertain and driving the stock price lower.
“You have countries that are important to production, like Vietnam. Right now you have the south of Vietnam completely closed from mid-July to at least mid-September,” said Jerome Griffith, CEO of Lands’ End, in an interview with CNBC’s “Power Lunch”.
The factory closings are a result of the ongoing global pandemic and have made it difficult to accurately predict the company’s performance this holiday season, Lands’ End said. US buyers wanted to restock their cabinets, but getting products to them isn’t always easy.
Lands’ End believes supply chain issues will hurt profit margins in the second half of the year. Retailers have had to pay higher prices for goods amid strong consumer demand. Transportation costs are also increasing as retailers try to expedite orders.
There are bottlenecks in the entire supply chain, said Griffith.
“You can see that factories have finished products and cannot book containers. Containers come by on ships, but the ships cannot enter ports where they want, ”he said.
The cost of shipping containers can be up to four times what it was a year ago, Griffith said.
Sometimes the higher costs can be offset by price increases, but it’s not a guarantee.
“In many cases, it is being passed on to the consumer across the industry,” Griffith said. Lands’ End uses artificial intelligence to predict where prices may rise due to spikes in consumer demand.
