Extreme weather and cotton spikes hit US apparel growth
Analysts have revised down expected growth for the US apparel and footwear industry due to the extreme weather the country suffered at the beginning of this year and the high price of cotton.
Consultancy Moody’s had previously pegged growth in 2015 at 7% to 9%, but now says it is more likely to be between 4% and 6%. This is still a quicker rate than in 2013, when the industry's revenues grew 3%.
The price of cotton, a key input, fell to 75 cents per pound in late 2013 and averaging around 80 cents for most of 2013 but has risen to 88 cents per pound and has averaged in the high 80-cent-range so far this year. Wages rises in China are also affecting margins, “although though pressure may be somewhat offset as production shifts to other lower-cost countries,” said Moody’s senior credit officer, Scott Tuhy.
"While this year's growth will still likely exceed 2013's, our more tempered view reflects the unusually slow start to the year, when shoppers stayed at home and companies cut back store hours due to bad weather. And although sales should improve with the warmer weather, they probably still won't be sufficient to compensate for the initial weakness."
