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Vietnam Crisis Threatens US Footwear Imports Growth

While production problems in Vietnam might not have shown up yet in import data, as it is a lagging indicator, U.S. footwear imports continue to rise considerably above last year’s levels when covid destroyed consumer demand.

For the year to date through July, U.S. footwear imports climbed 31.3 percent compared to 2020 to 1.26 billion pairs, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA), as retailers restocked for back-to-school and fall selling. This compared to a 30.7 percent gain in the first half.

Footwear imports from China dropped off a bit from a 32.5 percent rise in the six months through June, but still increased 30.7 percent in the seven-month period to 722.77 million pairs.

Shipments from Vietnam, which rose 25.6 percent in the first six months of the year compared to 2020, picked up the pace in July with a 28.6 percent increase to 332.27 pairs year to date. This gave China and Vietnam a combined 83.9 percent imports market share, up from 83.2 percent a month earlier, according to OTEXA.

But all that was before Covid-induced factory shutdowns in Vietnam began in July and have stymied shipments from Southeast Asian nation.

Financial analyst Camilo Lyon of the investment firm BTIG predicted this week that the halt in Vietnamese manufacturing could cost Nike 160 million pairs of shoes this year. With two months of “virtually no unit production” at Nike’s factory partners in Vietnam, Lyon estimated the company has lost 40 million pairs a month, or 80 million pairs total.

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With Vietnam accounting for 97 percent of Swiss firm On’s footwear last year and all of its shoes for the first half of 2021, the company said in a filing that it expects “that these disruptions will continue to adversely impact our business, financial condition and results of operations for the remainder of 2021 and 2022.”

Caleres chairman and CEO Diane Sullivan said supply chain headwinds resulted in approximately 28 percent less inventory across the company in the second quarter compared to two years ago. Sullivan said on a call with investors the company anticipates continued supply chain and logistics challenges and is “actively working with our partners to minimize these disruptions.”

These efforts have included diversifying the company’s supplier base and building in longer lead times “to everything,” both on the brand portfolio side and at Famous Footwear, Sullivan said.

Second-tier suppliers Indonesia, Cambodia, India, Italy and Mexico continued to show substantial year-to-date increases compared to 2020 and could potentially pick up market share if Vietnam’s production struggles don’t abate, an industry source said. Crocs, notably, plans to move some production to India and Indonesia, it said during an investor event Tuesday.