#: Foot Locker and Adidas join list of companies citing COVID-related supply chain challenges in Vietnam heading into the holiday shopping season

Other hurdles have been finding the containers and trucks to transport items, and the costs associated with solving these supply chain problems.

Read: Santa could be stalled as supply chain issues put toy sector at risk for the holidays

During the Trump administration, companies took steps to diversify their supply chains as the trade war between the U.S. and China drove higher tariffs. Many companies moved part of their supply chain to countries including Vietnam.

Panjiva data shows that “Vietnam accounted for 39.8% of U.S. seaborne imports in the 12 months to July 31, after an increase of 12.5% year over year in the second quarter of 2021 and a 44.5% surge in July,” the group wrote in a recent report.

Executives have taken steps to manage the situation, but acknowledge there isn’t an easy fix.

“We’re working really close with our vendor partners,” said Richard Johnson, chief executive at Foot Locker
FL,
+0.63%,
during their most recent earnings call, according to a FactSet transcript.

“And clearly the shutdown in Vietnam will have a longer-term knock-on effect. Most of the product for the back-to-school season and early holiday season is certainly built and on the water and will be available.”

And Buckle
BKE,
-1.61%
Chief Executive Dennis Nelson said on that company’s earnings call that there would be delays.

“With the shutdown in Vietnam, we’re going to have some deliveries that are later,” he said, according to FactSet.

Nike Inc.
NKE,
+1.11%
and Yeti Inc.
YETI,
-1.41%
have both cited slowdowns stemming from Vietnamese shutdowns in their earnings as well.

See: Nike manufacturing in Vietnam grinds to a halt due to COVID-19, creating another supply chain challenge

Also: Yeti, like Nike, experienced a shutdown in a Vietnam manufacturing facility due to COVID

“Since July, we’re now experiencing an additional challenge within our sourcing network due to a surge in COVID-19 infections in Southeast Asia,” said Kasper Rorsted, chief executive of Adidas AG
ADS,
+1.52%,
on that company’s most recent earnings call on Aug. 5, according to FactSet.

“The most impacted country is Vietnam where the government mandated large-scale factory lockdowns. And as a result, the vast majority of supplier factory capacity in the country has been unavailable since the middle of July, with current restrictions lasting until Aug. 15.”

Wells Fargo said in a recent note that the situation in Vietnam is “deteriorating.” Analysts there spoke with Miguel Blázquez, head buyer for the Spanish brand Mango.

“Even the global volatility arising from COVID doesn’t make those mitigation strategies sure-fire,” Wells Fargo wrote.

“With supply chains disrupted in Vietnam driving up costs and disrupting inventory flows, Mr. Blázquez expects these sourcing-related challenges to affect holiday, stating companies cannot afford lengthy delays around peak shopping weeks. Furthermore, there’s the kickdown effect of potential markdown risk on late-arriving product.”

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Cowen analysts also raised a warning flag in a note looking ahead to the RH
RH,
+0.34%
and Williams-Sonoma Inc.
WSM,
-0.87%
earnings, noting that Vietnam is the largest furniture exporter to the U.S.

“We think this has the potential to exacerbate already stretched supply chains and result in even longer delays. Some factories have been able to operate within bubbles, while many others have had to stop production,” the report said.

Analysts don’t know how much merchandise RH or Williams-Sonoma sources from Vietnam, but “[u]ltimately while disruption may not be drastic to either, this is another headwind which will reverberate across the industry.”

China is also experiencing slowdowns due to the pandemic. With eight out of 10 of the busiest ports in the world, this also makes things difficult for brands and retailers in the U.S. and around the world with the beginning of the holiday shopping season right around the corner.

Don’t miss: Opinion: COVID-19 is causing yet another shipping bottleneck in China, driving container rates through the roof

The SPDR S&P Retail ETF
XRT,
+1.05%
has gained 48% for the year-to-date while the benchmark S&P 500 index
SPX,
+0.85%
is up 19.5% for the period.