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COVID-19 impacting retail supply chains

Feb '20
An empty retail store after coronavirus outbreak in China. Pic: Shutterstock
An empty retail store after coronavirus outbreak in China. Pic: Shutterstock
The spread of COVID-19 in China and beyond is impacting supply chain, as well as sales and profitability of overseas retail brands operating in China. While constantly monitoring the situation and taking measures to ensure health and safety of employees, these brands are bracing for likely order fulfilment delays for the upcoming seasons.

“Like many other companies, the COVID-19 (the name given to coronavirus) outbreak is also impacting our supply chain. While only a low-double-digit per cent of our finished goods are manufactured in China, our contract manufacturers source a large portion of raw materials from China. Temporary factory closures and the pace of workers returning to work have impacted our contract manufacturers’ ability to source certain raw materials and to produce and fulfil finished goods in a timely manner," Columbia Sportswear Company said in statement.

"The outbreak is also impacting distribution and logistics providers’ ability to operate in the normal course of business. These supply chain impacts will likely affect our ability to timely fulfil orders and meet consumer demand. Given we have already received substantially all our Spring 2020 product, potential order fulfilment delays would impact future seasons,” the statement added.

SMCP, the global leader in luxury market having four brands sandro, maje, claudie pierlot and de fursac, said its sales and profitability are significantly impacted in China (a key market for the Group), and, to a lesser extent in the other regions, due to a decrease in Chinese tourists. "While SMCP had been generating a strong performance during the first 3 weeks of January in mainland China, a meaningful part of the Group’s stores has been temporarily closed in mainland China and in Macau since then. In parallel, the remaining stores are operating with limited opening hours," the company said.

“We have put in place a global team to monitor the situation daily, with the key priority of ensuring the safety, health and protection of our employees and our customers. While we cannot predict the duration of the crisis, we have been taking appropriate measures to mitigate the impact on our business," said SMCP CEO Daniel Lalonde.

Stating that the priority for the company has been to take appropriate measures to ensure the health and safety of its employees and partners, Columbia Sportswear chairman, president and CEO Tim Boyle said, “Thankfully, we have no reported incidents of our employees contracting the virus to date, and many of them are working remotely from home to help maintain business operations. While this outbreak will have a material impact on our near-term financial performance in China, we continue to believe China represents one of our largest long-term geographic opportunities."

Fibre2Fashion News Desk (DD)

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