Companies are mentioning the words ‘supply chain’ more than ever before during earnings calls

Companies have relied on lean supply chains until the pandemic disrupted things.

The term “supply chain” has been reference about 3,000 in investors’ earning calls this year.
A supply chain crisis is expected to slow down retail operations, especially during the holidays.
President Biden met with retailers to tackle alleviating supply chain pressures across the country.

Companies from Apple to Costco are echoing the same words in their third-quarter earnings calls, which could foreshadow major delays in the retail industry in the coming months.

S&P 500 executives have mentioned “supply chain” and related terms almost 3,000 times on company investor calls as of Tuesday, Bloomberg reported, surpassing last year’s tally of about 2,000 mentions.

“Supply chain is taking center stage on earnings calls as the supply chain is a disaster,” Scott Mushkin, an analyst at R5 Capital, told Bloomberg. “Honestly, there is a chance the system breaks down during the holidays.”

Supply chain disruptions caused by COVID-19 continue to strain retail schedules, especially as the markets head into the holiday season. Big retailers like Walmart, Ikea, and Home Depot have resorted to chartering their own bulk shipping vessels to sidestep shipping delays, while companies like Amazon and Lululemon invested more on their air freight delivery operations.

Meanwhile, executives are telling their customers to brace for continued shortages and imminent price hikes.

McCormick & Co. CEO Lawrence Kurzius cited “additional pressure on our supply chain due to strained transportation capacity and labor shortages and distribution” in an earnings call in September, which “negatively impact sales.” Pepsi CEO Ramon Laguarta said in an earnings call that the company pulled back some perimeter inventory in the summer “voluntarily” because of “supply chain constraints.”

However, companies can also use global supply chain issues as reasons to explain poor quarterly performances, some market experts say, using the term as a PR cushion to soften the impact of a company’s pandemic-era performance.

“Any company missing earnings can and will now freely employ the supply chain excuse,” lead market strategist and founder of NorthmanTrader Sven Henrich said in a tweet.

President Biden met Wednesday with officials from the Port of Los Angeles, which is facing a large onslaught of incoming cargo vessels stuck at port, to expand hours of operation to off-peak and night hours and hopefully lessen the stress of supply chain woes. But the discussions about the effects of supply chain problems isn’t going away.

“Holiday goods are waiting at the ports,” Stephanie Wissink, an analyst at Jefferies who covers retailers and consumer-product companies, told Bloomberg. “For retailers and brands alike, it’s a race against the clock.”

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