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In light of the recent port strike, retail giants say they’ve been addressing potential disruptions to their supply chains as the holiday season approaches.
Costco Wholesale Corp. (COST+2.55%) CEO Ron Vachris told investors during the company’s earnings call on Sept. 26 that the company has implemented several strategies to secure holiday goods ahead of the strike, which went into effect on Tuesday, Oct. 1.
“We have done a little bit of everything,” Vachris said. “We’ve got contingency plans. We’ve cleared the ports. We’ve pre-shipped.”
Moreover, Costco has “looked at alternate plans” that could help it “move goods to different ports across the country, if necessary,” said Vachris. He added that the company has been closely monitoring the port strike and was aware of the timing.
While nonfood items make up about 25% of Costco’s total business, only a portion are imported, with some products sourced domestically. This mix helps mitigate the impact of the port strike, partly because the company can rely on domestic goods while also securing its holiday inventory, Vachris said.
Like other companies, Costco depends on East Coast and Gulf Coast cargo facilities for distribution. The situation surrounding the port strike escalated after the International Longshoremen’s Association (ILA) rejected a contract offer from the United States Maritime Alliance (USMX), citing inadequate wages and protections.
Vachris acknowledged the port strike “could be disruptive,” but its impact will depend on the length of the strike and potential developments.
“It is in our sights,” Vachris said. “Our buyers are all over it. They’re watching it closely, and we’ve taken as many preemptive measures as we could to prepare for this.”
Walmart (WMT+0.70%) took a similar tone. “We prepare for unforeseen disruptions in our supply chain and maintain additional sources of supply to ensure we have key products available for our customers when and how they want them,” a Walmart representative said in statement to Quartz.
In the past week, retailers like Walmart and Walgreens (WBA-3.17%) are said to have accepted hundreds of containers filled with winter apparel, food, and electronics, NBC reported.
Meanwhile, Matthew Friend, Nike’s (NKE-0.38%) chief financial officer, told investors during the company’s earnings call on Oct. 1, that the East Coast port strike is a key concern and one that the company is monitoring closely.
Friend said that while Nike hasn’t factored in a specific timeline for it, it poses a potential risk to Nike’s financials.