Economy and Finance
Walmart, Gap, J.C. Penny Clothing Costs to Soar Due To “Terrifying” Cotton Prices
Price inflation isn’t just affecting food and energy. Leading department store retailers are bracing for significant price jumps in clothing due to cotton’s recent jump of 70% on commodities futures markets.
“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.â€
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