Mandated COVID-19 lockdowns in Vietnam and Indonesia will cause further inventory availability issues. Ten weeks of production at footwear and apparel factories have already been lost in Vietnam since mid-July, and it will take several months to return to full output. Production in Indonesia is now operational and “ramping back up to capacity.”
Nike expects inventory shortages will persist for the next few quarters, according to Friend, with regions in Asia with less in-transit inventory in the pipeline being hit hardest by the shutdowns.
Nike is putting its previous experience with COVID-related factory shutdowns to good use, factoring in how long it will take affected facilities to return to full production and adjusting its operations as such. Friend said the company is maximizing its footwear production capacity in other countries and shifting apparel production to countries like Indonesia and China.