Consumer demand is not the problem, but it brings products to shelves on time, according to clothing retailer Lands’ End.
Shares of the retailer closed more than 9% on Thursday at $ 31.10. Although the company achieved better-than-expected second-quarter tax results, supply chain issues make its outlook uncertain and lower its share price.
“You have major manufacturing countries, like Vietnam. Right now, you have South Vietnam completely closed from mid-July to at least mid-September,” Lands’ End CEO Jerome Griffith said in an interview and CNBC’s “Power Lunch.”
Factory shutdowns are the result of the ongoing global pandemic and have made it difficult to accurately predict the company’s performance during these holidays, Lands’ End said. American buyers have wanted to replenish their cabinets, but getting products is not always easy.
Lands’ End expects supply chain problems to affect profit margins during the second half of the year. Retailers have had to pay higher prices for goods amid strong consumer demand. In addition, shipping costs increase as retailers try to speed up the receipt of orders.
There are bottlenecks throughout the supply chain, Griffith said.
“You see factories that have finished products, that can’t reserve containers. Containers that arrive at ships, but that ships can’t enter ports. And, once they arrive at ports, the lack of truckers driving goods from ports to where they need to go, ”he said.
Griffith said the cost of shipping containers could be four times higher than a year ago.
Sometimes higher costs can be offset by price increases, but it’s not a guarantee.
“In many cases, what will happen to the entire industry is that it will be passed on to the consumer,” Griffith said. Lands’ End has used artificial intelligence to predict where prices may rise based on rising consumer demand.