Gap, Wal-Mart Clothing Costs Rise on `Terrifying' Cotton Prices

It certainly looks as if people might be forced to wear their favorite clothing a little longer. Trouble is, today's clothing is nowhere near as durable as it was in the past. The effects of currency devaluation, such as slashing the thickness of shirts and pants, have slowly eroded clothing durability over years.

Gap Inc., J.C. Penney Co. and other U.S. retailers may have to pay Chinese suppliers as much as 30 percent more for clothes as surging cotton prices boost costs.

“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.

Source: bloomberg.com

Still the spinsters cite yesterday's modest rise retail sales ex autos as a sign of recovering economy. Constant currency retail sales, however, tell a different story. The down trend suggests that much of the growth, which generates the headline excitement, is currency related.

Gold-Adjusted Retail Sales (RSGLDR) and YOY Change:


Headline: Retail sales rise is led by higher auto purchases

A surge in auto purchases helped lift retail sales in October by the largest amount in seven months. But excluding autos, retail sales rose more modestly.

October marked the fourth straight increase in retail sales after declines in May and June. Those drops had raised fears about the economic recovery. Still, economists say consumers probably aren't spending enough to lift sales growth above the lackluster pace of the past six months.

Source: finance.yahoo.com