Sales and Profit Warnings Signal That Supply Chains are More Challenged Than EverBoohoo (UK) was one of the first retailers to warn of slowing sales growth and a squeeze on profit margins as disruption to deliveries combines with higher shipping costs and wage rises at its warehouses. On September 30, the company reported pretax profits had sunk by almost 64% to £24.8 million in the six months to August 31, despite a 20 percent rise in sales to £975.9 million.Soon after, Asos (UK) warned that profits could fall by more than a third this year due to delivery delays and soaring shipping costs. Shares in the online fashion retailer have plunged by around 50 percent this year.Gymshark (UK), the cult-like DTC activewear brand with 5.4 million followers on Instagram, could shelve plans for an IPO as investors fear that the shine is coming off some of the pandemic’s biggest winners amid supply chain problems.In late September Nike (USA) CFO, Matt Friend, warned that his company now expects fiscal 2022 sales growth in the "mid single digits," compared with the earlier outlook for "low double digit growth"."Lost weeks of production combined with longer transit times will lead to short-term inventory shortages in the marketplace for the next few quarters," he added.Ikea has become the latest retailer to warn on supply chain problems, saying on October 14 that stock shortages were likely to last another year.This looks to be just the beginning of a list of retailers in Europe and the U.S. cautioning that Q4 might not live up to expectations as supply chains continue to deteriorate.“Welcome to the season of sales and profit warnings. Investors should brace themselves for disappointing trading updates as supply chain issues and inflation weigh on margins. There is a real risk that companies are going to miss earnings expectations despite there being strong demand for their products and services,” said analysts at AJ Bell.Big Demand Faces Low InventoriesA year of consumer spending being concentrated on products instead of services threw international logistics into a tailspin. But that was just the beginning of what seems like a never ending litany of supply chain woes.While sales remain strong, profits are taking a beating on the back of out-of-control cost increases.Shipping costs have skyrocketed - up over 300% year-on-year, and about 600% over 2019. Fears of empty shelves and stock outages are becoming real concerns, despite efforts to order early or charter carriers.Covid-related factory shutdowns, especially in Vietnam, have meant that brands including Nike, will have less inventory. Nike, for example, said it had lost 10 weeks of production in the south-east Asian country so far. Materials prices are pushing upward, and manufacturing costs - at least out of China - are expected to escalate on the back of the current energy shortage (which could soon become a ‘crisis’).In Guangdong, the government approved peak-time rate hikes of up to 25% for electricity transmitted from state-owned power companies to factories and other businesses, starting October 1. Zhejiang peak-hour prices for factories will be hiked starting Oct. 15, according to Chinese media. The peak time will be doubled to four hours, and off-peak prices will be cut.However, product price hikes are just one force that is now battering retailers.On the home front, a desperate shortage of frontline workers (shop assistants, warehouse staff, delivery drivers) is propeling wages and benefits at a pace that hasn’t been seen in decades.