Brands across all sectors have warned independents to expect price rises for spring 11 when the forward-order books open next month.
Brands told Drapers they had been forced to swallow the increased costs of cotton prices and Chinese manufacturing labour for autumn 10 and that the further weakening of the dollar had put huge pressure on their margins.
However, brand bosses warned that they could not sustain the increased cost pressures for spring 11 and that they would have to pass on some of the costs to retailers and consumers.
Simon Poole, managing director of men’s young fashion brand Luke, said: “Cotton prices are up 20% and factories are closing. The dollar is hurting us.
“I’ve just launched [the collection] for Christmas. It was probably the worst margin I have ever had because I didn’t want to pass it on to the customer.”
Another leading brand boss said the branded sector was facing its most difficult season to date. He explained: “Because brands work so far in advance they haven’t planned for a potential VAT rise. They have to think very fast about what to do for spring 11.”
Poole said: “We should have put a 6% to 8% price increase on for the customer but if we had, we would have seen a drop in sell-through. But we won’t swallow it again. We have taken a hit and can’t afford to lose any more.”
One finance director of a premium lifestyle brand warned: “With all the other headwinds hitting consumers, such as tax increases and job losses, price rises are not going to be easy. It will make a difference on volumes.”
He said that although brands were “pretty far down the line” in fixing selling prices for spring 11, it was not too late for them to revisit these to lessen the impact. He added: “The indies are probably not prepared for these rises though.”