LOGISTICAL HURDLES

• Retailers are reporting global shipping delays as goods meant to feed post-pandemic demand flood supply chains still reeling from Covid-19.
• Some of the worst delays are at Southern California’s ports, where Asian apparel imports enter the US.
• Brands expect the delays to reduce sales, increase costs and potentially create a glut later this year as delayed shipments arrive.

Retail executives have spent the past year dreaming about the epic post-pandemic shopping sprees they hope will commence as soon as lockdowns lift. Now that the end is in sight, there’s just one problem: they might not have enough merchandise to stock their shelves. Global supply chains, which ran lean during the worst of the pandemic, are ramping back up in anticipation of post-Covid demand, and are now snarled from end to end. The worst bottleneck is at Southern California’s massive container ports, where ships wait in endless queues to unload imported goods from Asia. Airfreight isn’t much better, as international flights remain below normal levels. Covid safety precautions and outbreaks among port and warehouse workers are causing unpredictable delays.

The fashion industry is already feeling the pain. Brands ranging from Gap to Kate Spade have cited transportation problems as a headwind. Ross, a US off-price chain, recently warned not only of inventory disruptions today, but a “bubble” down the line as shipments currently stuck in transit floods the market once the logjams are resolved. Nordstrom offered a preview of this phenomenon, reporting last week that a wave of merchandise meant for holiday shoppers is only arriving at stores and warehouses now, forcing out-of-season markdowns. Investors were unsympathetic, sending the company’s stock down 5 percent.

The Bottom Line: As has been the case throughout the pandemic, transparency with customers about shipping delays is the key to weathering the latest snafus.

POST-PANDEMIC DRESSING ON THE RUNWAY

• Chanel, Louis Vuitton and several other major brands will stage digital shows in Paris this week.
• Luxury labels have a brief window to define post-pandemic dressing before lockdowns lift and consumers return to stores, bars and restaurants.

In a few days, Louis Vuitton will bring another pandemic fashion month to another somewhat anticlimactic end. This was likely the last all-digital season, and, despite reports that some designers prefer the virtual format, many brands are no doubt itching to get their pre-Covid runway mojo back. As for the clothes? While the shows may be garnering less attention this season, this is nevertheless a crucial collection for many designers. Consumers are already planning their post-pandemic wardrobes, and many are likely headed straight to bars, restaurants and parties as soon as they get their second vaccination.

The Bottom Line: Some brands, notably Prada, took a stab at defining the post-pandemic look. Many brands have taken the opposite approach, however, with shows that reflected the current, solemn reality rather than the (presumably) happier days to come.

RENEWED FOCUS AT ADIDAS

• Adidas will release fourth-quarter results and outline future plans at an investor day on March 10.
• Adidas has had a slower rebound from the pandemic than Nike.
• The company wants to quickly sell Reebok to focus on its core brand.

Adidas would be considered a pandemic success story — if it wasn’t constantly being compared to rival Nike. Sales are rising, though lockdowns in Europe continue to sting. E-commerce momentum is also strong; Piper Sandler expects Adidas could raise online’s share of revenue from about 20 percent today to 40 percent in 2025. The problem is that Nike has seen even faster growth online thanks to its membership programmes and direct sales pivot (and also benefits from the faster economic recovery in the US). Adidas has a few tricks up its sleeve, especially when it comes to sustainability, and it’s likely some fresh initiatives will be announced during presentations to investors on Wednesday. Shedding Reebok will also help the company focus on growing its core brands.

The Bottom Line: Adidas has plenty going for it, but needs to continue innovating online and on the sustainability front if it’s to remain competitive in the cutthroat sneaker market.

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