American Consumers Will Not Buy Cheap Clothes Because Of Falling Cotton Prices.

American shoppers who buy Jeans, T-shirts and socks have recently had to take more cash out of their pockets, and in the future they had better get used to paying more.

Even though cotton prices have fallen from the highest point in spring, retailers and garment makers are doomed to maintain most of the price rise earlier this year, and earlier they tried to include losses in profits.

Most people only offer price discounts when facing the pressure of competitors.

Chain stores and their suppliers, as long as they can do that, will avoid raising prices. They fear the counterforce from consumers, because consumers are still struggling to cope with high unemployment and high gasoline prices.

But just as they can not pass on all the cost increases, retailers and clothing dealers will not hand over all their savings.

In fact, many people will try to use the margin income as a cushion to deal with other rising costs next year. They bet that shoppers are becoming more and more accustomed to paying more money after 10 years without inflation.

"The reality is that our consumers in the United States enjoy cheap clothing for a period of time," said Robert, chief financial officer of VF, in an interview with Reuters on Monday.

VF produces moderate price Wrangler and Lee Jeans Brands.

In the last quarter, VF's gross profit margin (measured the profitability of the goods sold) decreased by 1.2% to 45.3%, due to the decline in its jeans business, and the jeans business accounted for 1/4 of the company's sales.

Gap said in May that the cost of products will rise 20% in the second half of 2011, but the company can not raise the price to enough to offset the increase in costs.

In March, ICE futures and US cotton futures prices surged and reached record highs, nearly three times higher than last year, and spot cotton prices were about 80 cents / pound last year.

Since then, the contract price has fallen by more than half, but it is still 40% higher than two years ago.

The price increase depends on how much cotton is there.

But Marshal Cohen, chief retail analyst at NPD group, estimates that the price of basic necessities, socks, underwear and jeans has risen by about 10%.

A jeans increase of 3 dollars seems unimpressive, but for a $30 Wrangler (wrangler), this increase is very obvious, but shoppers must pay an average of 23% more than last year to buy gasoline. For them, buying high priced clothing is a very hard thing.

VF said on Monday that sales of jeans in the US increased slightly in dollar terms, as prices rose moderately, but sales declined, indicating that garment manufacturers and stores must follow the boutique route.

David Bassuk, managing director of AlixPartners, estimates that retailers are best able to pfer half of the cost to shoppers and the rest to share profits from suppliers.

Now, VF, Gap and other companies sell clothes that use a lot of cotton, such as Eagle brand travel and Nike, telling investors that their gross margins should begin to increase in the second half of 2012.

NPD's Cohen said, "the benefits from falling cotton costs should be reflected in profit margins, and they will not lower prices."

George Feldenkreis, chief executive officer of Perry Ellis limited, pointed out that cotton is not the only factor of cost rise. Labor costs in China are rising. Most of the garments produced in China are bought by American consumers. The increase in natural gas prices leads to higher cost of shopping malls.

Since the preparation time of the supply chain takes 9 months to a year, prices will continue to rise slowly until spring.

After that, prices should be at a higher level.

Nate Herman, vice president of the apparel and footwear industry association, said: "retail prices will not fall, but prices will not stop."

The clothing and Footwear Association of the United States represents about 700 garment companies.