High Price of Cotton Tears at Retailers' Business Fabric

Sunday, October 30, 2011

Earlier this year, world cotton prices hit a record high. Now, the higher costs are working their way through the supply chain to consumers and the labels that sell to them.

One of the affected companies is Brooklyn Industries, the small Brooklyn-based casual clothing chain. CEO Lexy Funk said the cotton she buys from Peru is priced noticeably higher than it was just one year ago.

"Much higher! I mean almost double, in terms of your raw material costs," Funk said.

That's squeezing her margins, especially on T-shirts, which make up a quarter of Brooklyn Industries' revenues. For now, Funk said, she's holding prices down for consumers, and waiting for cotton prices to decline.

Many other clothing retailers have already raised their prices.

Cotton Inc., the industry group representing U.S. cotton farmers and apparel makers said cotton prices today are 20 percent higher than a year ago, due to a variety of factors, including weather and some farmers switching their acres from cotton to corn and soybeans.


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