Sourcing operations at Nike and Reebok International could be disrupted if the devastating tsunamis that hit southern Asia affect their suppliers in the region, Prudential Equity Group said last week.
“The recent tragic natural disaster in Southeast Asia could pose some risk to sourcing for footwear and apparel companies that source from the region,” analyst Lizbeth Dunn wrote in a note to clients. “Risks include shipping delays, product destruction, factory damage and the obvious risk to the workforce.”
Dunn said that Nike receives 43% of its footwear from Indonesia and Thailand, while Reebok sources out 36% to the two countries. As a result, “both athletic brands have some risk exposure regarding footwear supply chains, but their apparel operations are less vulnerable.”
“Apparel sourcing is less concentrated for Nike, Reebok and all our companies; thus, we believe there is less risk of a product disruption in apparel,” she added.
Footwear sourcing is more concentrated, as the top eight producer countries account for 90 percent of global supplies, said Dunn. Conversely, apparel sourcing is very fragmented, with less than 60 percent coming from the top 10 producer countries worldwide.
>>> A couple of quick phone calls to Nike and Reebok revealed that first, and most important, all employees are safe and unaffected by the tragedy and secondly that they are experiencing no disruptions to the supply chain as all factories and shipping are on the Sea of Japan side of both countries, not on the Bay of Bengal…