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BusINess » Business Consumer » Clothing prices to rise 10 percent starting in spring

Clothing prices to rise 10 percent starting in spring

Customer Brian Begay looks at a pair of Levi Strauss & Co. jeans at a store in Hayward, Calif. Cotton has more than doubled in price over the past year, and the price of other synthetic fabrics has jumped almost just as much as demand for alternatives and blends has risen. Clothing prices are expected to rise by 10 percent in the coming months. (Photograph by Paul Sakuma/The Associated Press.)

Customer Brian Begay looks at a pair of Levi Strauss & Co. jeans at a store in Hayward, Calif. Cotton has more than doubled in price over the past year, and the price of other synthetic fabrics has jumped almost just as much as demand for alternatives and blends has risen. Clothing prices are expected to rise by 10 percent in the coming months.
(Photograph by Paul Sakuma/The Associated Press.)

The era of falling clothing prices is ending.

Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs. Retailers and clothing makers cut frills and experimented with fabric blends to cut prices during the recession.

But as the world economy recovers and demand for goods rises, a surge in labor and raw materials costs is squeezing retailers and manufacturers who have run out of ways to pare costs.

Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen.

Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III, president of Strategic Resource Group.

Brooks Brothers’ wrinkle-free men’s dress shirts now cost $88, up from $79.50. Levi Strauss & Co., Wrangler jeans maker VF Corp., J.C. Penney Co., Nike and designer shoe seller Steve Madden also plan increases.

More specifics on price increases are expected when clothing retailers such as J.C. Penney Co. and Abercrombie & Fitch Co. report financial results this month.

“All of our brands, every single brand, will take some price increases,” said Eric Wiseman, chairman and CEO of VF Corp., whose brands include The North Face, Nautica, Wrangler and Lee.

Cotton accounts for half the production cost of jeans, which make up about one-third of VF’s sales, he told investors in November.

Higher costs also will affect how clothes are made. Clothing makers are blending more synthetic fabrics like rayon and designing jeans with fewer beads and other embellishments. Shoppers also will have fewer color choices.

Retailers are trying to figure out whether consumer demand that gave them strong holiday sales will last. The fear is higher prices will nip that budding demand. Stores that cater to low- and middle-income shoppers will have the hardest time passing along price increases.

“We have been so used to deflation for years and years,” said David Bassuk, managing director in the retail practice of AlixPartners. “Customers are going to be surprised.”

Janice Mignanelli, of Washington Township, N.J., doesn’t want any surprises.

“‘I’m not going to spend any more than $50 for a pair of jeans,” said Mignanelli, a stay-at-home mom shopping last week at The Garden State Plaza in Paramus, N.J. “I’ll just have to cut back on the extras.”

Even affluent shoppers, whose spending has rebounded, may bristle.

“It does give me some pause,” said Jimmy Franco, a 47-year-old publicity executive and fan of Brooks Brothers’ shirts. “Instead of buying two, I may just get one and a pair of socks. There’s a certain amount of money that I’m prepared to spend.”

Cotton has jumped to a 150-year-high, hitting $1.90 per pound Friday. That’s more than double the price a year ago and just ahead of the $1.89 record during the Civil War, according to the International Cotton Advisory Committee. But the Civil War-era price isn’t adjusted for inflation, and the cotton group said it doesn’t have an adjusted figure available. The government inflation calculator only goes back to 1913, but at that point $1.89 had the same general power buying power as $41.63 does today.

Cotton prices began soaring in August after bad weather cut harvests in major producing countries including China, the U.S., Pakistan and Australia.

Restrictions on exports from India, the world’s second-largest cotton exporter behind China, also have produced cotton shortages. On top of that, worldwide demand for cotton has risen as the global economy improves.

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