NetEase Finance April 27th According to FT Chinese Network, Fitch, the credit rating agency, said that due to higher cotton prices, labor costs in China continue to rise, and US retailers will be forced to increase their apparel prices this year, up from last year. 15% higher.
In the past year, consumer demand in emerging markets pushed up commodity prices, which intensified inflation in the West. Cotton prices rose by 120%, hitting a peak of more than US$ 2 per pound in early March of this year. The wages of Chinese garment factories are also rising.
This price increase will affect many brands from North Face to Levi's. It will mark the end of a decade-long era: During these two decades, as western manufacturers shift more production to low-cost emerging markets, clothing costs continue to decline.
Mike Ullman, chief executive of mid-range department store JC Penney, predicted last week that the entire industry will only increase garment prices by 5% to 20% in the second half of this year. JC Penney sells many brands of clothing, including Liz Claiborne and Dockers.
Levi Strauss warned this month that its clothing "will have double-digit price increases." It stated that the consumer's response was "unpredictable" and reminded that the price increase may lead to a decrease in sales. Levi's Levi's jeans typically have 90% of their cotton content.
Agawal predicts that the increase in cost will cause the gross margin of US apparel retailers to drop by 0.3% to 0.5%. The gross margin of US apparel retailers is usually between 38% and 40%.
In the past year, consumer demand in emerging markets pushed up commodity prices, which intensified inflation in the West. Cotton prices rose by 120%, hitting a peak of more than US$ 2 per pound in early March of this year. The wages of Chinese garment factories are also rising.
This price increase will affect many brands from North Face to Levi's. It will mark the end of a decade-long era: During these two decades, as western manufacturers shift more production to low-cost emerging markets, clothing costs continue to decline.
Mike Ullman, chief executive of mid-range department store JC Penney, predicted last week that the entire industry will only increase garment prices by 5% to 20% in the second half of this year. JC Penney sells many brands of clothing, including Liz Claiborne and Dockers.
Levi Strauss warned this month that its clothing "will have double-digit price increases." It stated that the consumer's response was "unpredictable" and reminded that the price increase may lead to a decrease in sales. Levi's Levi's jeans typically have 90% of their cotton content.
Agawal predicts that the increase in cost will cause the gross margin of US apparel retailers to drop by 0.3% to 0.5%. The gross margin of US apparel retailers is usually between 38% and 40%.
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