Bangladesh’s impending lockdown will hit H&M, Levi’s clothing retailers – .

Bangladesh’s impending lockdown will hit H&M, Levi’s clothing retailers – .

Clothing retailers including H&M and Levi Strauss & Co. face increased supply chain disruptions as parts of South Asia brace for intense lockdowns as cases of Covid- 19 are increasing, fueled by the more contagious delta variant, according to a new report.
A new wave of Covid cases, on the rise especially along the Indian border, has prompted the government of Bangladesh to demand that its population of nearly 170 million people stay at home for seven days, starting Thursday. The result will likely mean factories in the region will be forced to shut down, which will stop manufacturing. It is the most severe lockdown in Bangladesh to date, with people only allowed to leave their homes in an emergency.

A new analysis from Panjiva, a business arm of S&P Global Market Intelligence, points out that this is a sharp reversal from a trend spotted earlier in the pandemic. Then, Bangladeshi clothing manufacturers suffered from the cancellation of orders by retailers in Europe and the Americas, where Covid restrictions were much stricter.

Still, data from Panjiva shows Bangladeshi clothing exporters to the United States have been more resilient than neighboring regions during the pandemic. Shipments in the quarter ended April 30 were only 1.6% lower than the same period in 2019, the company said. Exporters from India and Sri Lanka, for comparison, fell 10.1% and 6.4%, respectively.

Among major retail brands operating in Bangladesh, H&M-related shipments increased 13.5% in the quarter ended May 31 compared to the same period of 2019, Panjiva found. While imports associated with Levi’s fell 47.8%, and those with PVH, owner of Calvin Klein, fell 68.7%.

Representatives for H&M, Levi’s and PVH did not immediately respond to CNBC’s requests for comment.

According to a September 2020 analysis of U.S. International Trade Commission data by the Peterson Institute for International Economics, as China has become less competitive in labor-intensive sectors, including clothing, Bangladesh has gained market share.

Additional supply chain disruptions will hit retail businesses at a time when resources are already limited due to a number of factors. A shortage of shipping containers and a shortage of truck drivers left stocks on hold for weeks. This is usually the time when retailers place orders for the holiday season to ensure shelves are stocked during peak winter shopping.

The risk businesses face is running out of stock, forcing customers to look elsewhere.

Brooks Running Company CEO Jim Weber told CNBC’s “Squawk Box” on Tuesday that his business was operating on a shipping cycle of around 80 days, down from just 40 days previously.

“There is no question that the supply chain is very extensive in our industry,” he said.


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