Industry Update

It’s been a few months since I last updated you on the challenges affecting our industry. While we’ve made significant progress, we continue to work to address shortfalls in our available inventory in order to meet your expectations of you and your customers. In addition, we have received price increases from numerous industry suppliers which will require us to raise prices on all of our basics brands. 

To give you more insight into what is going on, I’d like to share with you some of the wins we’ve had in the last few months and the ongoing challenges we face. 

Labor
The labor environment is exceptionally competitive and staffing levels are difficult to predict as new COVID‑19 cases fluctuate in many communities. We are leaving no stone unturned to make sure we have the people available to deliver on our service promise to you. We have successfully hired and trained over 150 new inside sales team members this year and we have increased pay significantly in our distribution centers, hiring every day to ensure that we are able to meet demand levels for the upcoming holiday season. 

These efforts are helping, and we are grateful to all our employees who are bearing the brunt of this busy time. 

Inventory
Earlier this year, supply chain challenges led to our inventory declining to significantly lower-than-historical levels. While demand across almost all of our product categories has remained strong and our inventory has held steady for the last few months, we have not been able to grow inventory levels as much as we would have liked. 

As COVID‑19 infection rates continue to change around the world, production has been impacted in different countries at different times. Today, shutdowns in Vietnam and Indonesia are especially concerning, and we are also now facing a shortage of yarn as many U.S. yarn vendors are not operating at full capacity due to labor shortages.

Despite all of these factors, our warehouses are currently receiving the greatest amount of product that we’ve ever seen in a single quarter ‑ 50% more than we received in 2019 during the same period. While we are making progress, I currently believe that target inventory levels will not be fully restored until mid‑2022.

Logistics
The global pandemic has created more demand than capacity across all logistics networks. Delays continue to be prevalent due to shortages of containers and vessel availability and made worse by port and rail congestion as well as overtaxed parcel networks.

Given these delays, we are frequently asked about backordered product ETAs and I know that it is frustrating when we can’t tell you when something you need is going to be available. I share that frustration, and I know our logistics team does too. There are a couple situations that apply here, and we are addressing each separately.

With shipping capacity in high demand, we are paying whatever is necessary to move our shipping containers. In some cases we have spent $20,000 for a single container from Asia to the west coast, more than 10 times what that same container would have cost just over a year ago. We’ll continue to invest to make sure our product is delivered, including utilizing air freight wherever it is available.
 
While we expect the 4th quarter to be busy throughout, Cyber Monday is expected to be busier than ever this year, so anything you can do to ship prior to that day would be advised. In general, you should expect carrier delays throughout the holiday season, especially early in the week. 

I’m used to saying that we don’t have one supply chain but many. We may make a polo in Vietnam using Taiwanese fabric, use yarn spun in the U.S. for a sweatshirt made in Honduras or craft a t‑shirt from beginning to end in Tennessee. Over the last 15 months, this diversity has meant that some sources were working really well while others struggled. We are doing everything we can and making steady improvements to be the supplier you have come to trust and get back to the service levels you expect and deserve.

I appreciate your support as we work through all these challenges together.