Updated from 8:31 a.m. EST
So far, retailers and apparel outfits haven't said they've seen higher rates of SARS-related absenteeism among their Asian workforce. But it stands to reason they're feeling a little edgy on reports the disease is spreading, given that many rely heavily on suppliers in the region.
Already, jitters about severe acute respiratory syndrome have prompted U.S.-based companies such as
to rethink Asian travel plans.
Federated Department Stores
( FD), which owns Macy's and Bloomingdale's, has suspended travel to Hong Kong and Singapore."
"I think ultimately what could happen, since many clothing and footwear companies seem to be canceling their travel plans to Asia-Pacific, is that this could slow down the product development cycle," says Teresa Meyer, an analyst for footwear, apparel and sporting goods at D.A. Davidson. But she cautioned that was a very "preliminary estimate."
It's too early to really know how the ailment might weigh on productivity, she added. But so far, "It's not like the dockworkers' strike situation," she said. "I think it's had far less significant economic impact."
The strike, which took place in last fall following the expiration of a union work contract, "really slowed down the flow of goods and affected some apparel and footwear companies."
Within the broad retail universe, footwear companies are likely to be especially worried about SARS because their subcontracting base is so highly concentrated in Asia, particularly in China.
"The epicenter of the outbreak is in the southern province of China, which is the epicenter of athletic footwear," points out Meyer.
About 1,800 people are known to have contracted the disease, and 62 have died, a mortality rate lower than that of the West Nile virus.
Among the footwear outfits that rely heavily on Asian factories are Nike,
( TBL) and
, she said.
By comparison, many apparel companies buy from a more geographically diverse supply base, including Mexico, the Caribbean and India.
Still, Asia accounts for some 30% to 40% of apparel imports into the U.S., and that portion is growing, says David Campbell, an analyst at Davenport & Co. "I think this would be a concern for the industry if it were to go on for a while, because companies do source a significant amount of production there, and they can't just replace that volume overnight."
is one example of such a company. In its 10-K filed two weeks ago, the apparel maker said it produces a significant portion of products in China, noting that adverse conditions there could hurt its financial condition.
Columbia sources 99% of its goods from overseas. Though it declined to give a specific geographic breakout, its principal suppliers are in the Far East, the company said.
Along similar lines,
spokeswoman Jan Drummond says the retailer doesn't own any of its own manufacturing facilities, but buys much of its apparel from Asia. "I think our international buying offices are right on top of this and monitoring it very closely," she said.