[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|
Status: Not Logged In; Sign In
Business Title: Gap, Wal-Mart Clothing Costs Rise on ‘Terrifying’ Cotton Prices Nov. 16 (Bloomberg) -- Gap Inc., J.C. Penney Co. and other U.S. retailers may have to pay Chinese suppliers as much as 30 percent more for clothes as surging cotton prices boost costs. “It’s a little terrifying to deal with cotton suppliers now,” said Vicky Wu, a sales manager at Suzhou Unitedtex Enterprise Ltd., a closely held, Jiangsu province-based clothes maker that counts Gap and J.C. Penney among its clients. Cotton futures in China have surged more than 70 percent this year and were at a record earlier as the global economy emerged from recession, allowing people to spend more on clothes. Production of the fiber in China, the world’s biggest user and importer, is forecast to lag behind demand for a 12th year, cutting its stockpile to the smallest since 1995, according to the U.S. Department of Agriculture. “American consumers better get used to rising prices on the shelves of Wal-Mart and other retailers,” said Jessica Lo, Shanghai-based managing director at China Market Research Group. “China’s manufacturers are getting squeezed not only by rising cotton costs but also soaring real estate and labor costs.” John Ermatinger, Gap’s Asia president, declined to say whether it would raise prices. “We are going to be mindful of our competition,” he said in a Nov. 10 interview in Shanghai. “We are going to be mindful of our consumer. That’s how we’ll ultimately establish our prices.” Shandong Zaozhuang Tianlong Knitting Co., which makes Polo Ralph Lauren Corp. T-shirts and track suits for Le Coq Sportif Holding SA, has raised prices as much as 70 percent from a year earlier, said sales manager Fred Hu. “If cotton keeps rising like this, we will need to lift prices by 30 percent by the Spring Festival next year or we lose money.” T-Shirt Price Increase Closely held Tianlong ships 80 million yuan of clothes to Europe, North America and Japan annually, and raised the price of T-shirts it sells to Ralph Lauren to $4 each, from $3.20 in July, he said. Unitedtex, which sells $24 million worth of shirts and jackets annually to Gap, plans to raise prices by 5 percent to 30 percent for products that will be available in April, Wu said in an interview. The supplier plans to increase capacity to meet the retailer’s demand, she said. “It’s very hard to budget for input cost, if prices are as volatile as they are,” said Peter Rizzo, Sydney-based managing director at FCStone Australia Pty. "It heightens the awareness of Chinese textile manufacturers to look at risk-management tools.’’ Cotton-silk blend fabric has surged about 70 percent to approximately $2.3 a yard since July and prices are now quoted on a daily basis, manufacturing executives Wu and Hu said. One-Week Pricing “We can give clients a price now, but it will only be valid for a week,” said Tianlong’s Hu. Some manufacturers aren’t taking orders for next year because of fluctuating cotton prices, J.C. Penney Chief Executive Officer Myron Ullman said Nov. 12. “If cotton goes up 50% or 70%, or wherever it lands, there will be an impact on pricing that everybody in our industry is going to feel, but our objective is to have a competitive advantage, particularly on key price points the customer would expect us to maintain,” he said. China’s demand for cotton outstripped domestic production by 3.6 million metric tons in 2009 to 2010, widening a supply deficit, the China Cotton Association said Sept. 27. Cotton production in China, forecast to consume about 41 percent of the global harvest, may lag behind demand by 17 million bales in the year that began Aug. 1, according to the USDA. That’s more than enough to make a pair of jeans for every person in China and India, according to Bloomberg calculations and data on the National Cotton Council of America’s website. Crimped Margins Clothes makers are beginning to lose money on some orders, Unitedtex’s Wu said. “Even if we know we’ll lose money with this order, we’ll still do it, hoping to make up the loss in the next deal,” she said. Gross margins for clothing retailers’ suppliers are between 10 and 20 percent, and net margin is usually between 3 percent and 5 percent, according to Wu and Hu. Zhejiang province-based Ningbo Seduno Group, which sells about $30 million worth of men’s and women’s clothes to Hennes & Mauritz AB annually, increased prices by almost 20 percent since July, said sales manager Fiona Xu. Seduno also supplies Adidas AG, Inditex SA’s Zara and Nike Inc.’s Umbro Plc, and will keep raising prices as cotton costs increase, Xu said. H&M Monitoring “H&M is constantly monitoring the price of cotton and other costs,” said spokeswoman Jenni Tapper-Hoel, who wouldn’t comment on whether it would raise prices. Adidas sees a “limited impact” from cotton prices, said spokeswoman Katja Schreiber. Zhejiang Datu Garments Co Ltd., which shipped $4 million worth of pullovers to Wal-Mart Stores Inc. last year, raised prices to $9 a piece from $7.50 in August, said sales manager Bella Weng. Wal-Mart spokesman Kevin Gardner declined to comment. Zhejiang-based Datu plans to further raise prices by 20 percent to 30 percent, she said earlier this month at her Canton Fair booth, which was filled with polo shirts and pullovers that she said were made for Wal-Mart. “We’ve been holding up fairly well even with the yuan rising,” Tianlong’s Hu said. “Cotton prices are just more unpredictable. We’re facing a real test.”
Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 1.
#1. To: Brian S (#0)
Whats 'terrifying' is the Administration is actively lying about inflation, AND unemployment numbers. They changed the formula used to factor in 'seasonal adjustments' so they could claim '151,000 jobs created' in October. The actually figures are 51,000 jobs LOST in October. If you deny a problem, you can't address the problem.
#4. To: Badeye (#1)
What I actual mean was that Octobers were lost and Owe-Bama is ligng about it.
Top • Page Up • Full Thread • Page Down • Bottom/Latest |
|
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|