Apparel Retailers, Finally Recovering, Eye Cotton Prices Warily
(Bloomberg) -- Apparel retailers are finally winning back shoppers just as a new potential problem arises: more expensive cotton.
Abercrombie & Fitch Co. is keeping an eye on rising cotton prices and the retailer’s supply chain teams are working to try to offset the costs, the company said on a conference call Friday after reporting first-quarter earnings.
Retailers have begun to bounce back from a shift away from apparel by consumers, who are spending more of their money on experiences and technology. Now, after a first quarter when many clothing companies saw improved demand, commodity prices may hamper that good news.
Cotton futures surged to a four-year high in New York on May 29 as heavy storms and chilly weather exacerbated concerns about supplies at a time of record demand. Drought conditions in top grower Texas may lead farmers to abandon crops above average rates. Meanwhile, cold snaps in China and dryness in India may curb Asian production. Futures for December delivery rose Friday as much as 1.5 percent, and the fiber was on pace for the seventh straight gain, the longest rally since March 2013.
Cotton has climbed 17 percent this year after surging a combined 30 percent in the past three years.
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