Pricey cotton puts pinch on clothing shops and manufacturers

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HACKENSACK, N.J. — Price surges in cotton and other fabrics have retailers and manufacturers feeling stretched, and facing a tough choice: Pass higher costs along to their customers or absorb them, thus cutting into profit margins.
So far, consumers haven’t really felt the impact of cotton prices that have jumped more than 130 percent in a year to the highest prices per pound since the Civil War, but retailers and manufacturers say that probably will change when fall merchandise begins arriving.
A decrease in the cotton supply because of poor crops and reduced planting in response to the recession, rising labor costs in China and India, and renewed demand for apparel as the economy recovers, have combined to make cotton a hot commodity.
"I’m getting calls all the time — ‘You got any cotton? You still have that cotton?’ " said Danny Letzt, co-owner of Les Tout Petits, a children’s clothing maker in Ridgefield.
Letzt has a "long" position in cotton, with several dozen rolls of fabric he stocked up on in the past and is selling to other manufacturers searching for the fabric. "It’s like having cash," he said. "It used to be that you couldn’t give it away."
Les Tout Petits has cotton to spare in part because it has shifted its fashion line a bit away from more casual, cotton T-shirts and toward dresses and party clothes that use polyester blends, sequins or other specialty fabrics.
But the cotton shortage has driven up demand for other fabrics as well, and Les Tout Petits recently learned it couldn’t get a fabric it needed for one of its designs. It’s also been hit with price increases for polyesters as well as for cotton.
Lois Letzt, Danny’s wife and business partner, designs the Les Tout Petits fashions sold in trendy boutiques in Manhattan and throughout the country and have been worn by the Obama daughters. She said the company is trying to cut its costs rather than pass price increases on to retailers. Consumers will pay extra for special-occasion outfits, such as party dresses, but not for basic staples, a retail fact of life pushing her to focus more on special- occasion clothes, she said.
This month and next are when retailers head for trade shows to view fashions and place orders for fall, and store owners say they’re already seeing the impact of the cotton-price surge.
Joyce Hamrah, co-owner of Hamrah’s, an upscale women’s clothing store in Cresskill, N.J., toured designer showrooms last week and saw cotton shirts priced at $400 to $500 that would have been $300 a year ago. The manufacturers "tell you this is the price, and we have to decide what we want to do in the way of buying it or not," Hamrah said.
The store’s buyers are shopping around more to find in-demand fashions at good quality at the best prices. "For a basic shirt, or something that’s simple, $500 is a lot of money," she said.
Although Hamrah’s is coming off a good 2010, according to its owners, and its customers are buying enthusiastically, Hamrah said the store is not going to assume it can pass along price increases. "Any retailer with a little common sense is going to watch it," because even affluent customers want to get a good value for their dollar.

(Source: http://www.heraldnet.com/article/20110226/BIZ/702269951/1015/BIZ04)

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