NEW YORK -- Despite a flattening of the denim market toward the end of last year, mill executives are upbeat about the remainder of 1994.
They said their outlook was based on a better economy, plants that are running at full capacity, the fact that orders are up and that everyone's trying new denim applications. Mill executives also said they were trying to work closer to the season, as manufacturers and retailers become more demanding.
Still, execs are concerned about the rising price of cotton, which is hampering profit margins. As of May 12, cotton had risen to about 82 cents per pound, up from 60 cents a year ago, according to figures from the National Cotton Council, the legislative and lobbying branch of the cotton industry.
"We're being severely impacted by the cotton costs," said William Dunnahoo, Thomaston Mills' vice president, apparel, who noted that his firm, like many others, was forced to raise prices for the third quarter to cover the increases.
"It will be difficult if we don't get the prices up," Dunnahoo added. "It's less than 10 percent, but still, our customers feel that's significant."
Greenwood Mills is another firm that will have to raise prices in order to stem rising cotton costs. "We are going to have to pass those costs on," said Robert Kaplan, president of Greenwood's denim division. Kaplan wouldn't divulge how much Greenwood would increase its prices. "The thing that concerns us is that margins could, and probably will, slip," he said.
"While we are taking an interest in the higher prices of cotton, it's something that is impacting everyone in the industry, so we are all in this thing together," said John Heldrich, president of Swift Textiles. "Everybody's margins are being squeezed throughout the chain."
"Still, our sold position is strong, and looks to continue so through the third quarter," Heldrich said. "The momentum is there."
Swift is currently running at full capacity, said Heldrich, who noted, "The worst of times are behind this industry. I have noticed an improvement at retail, especially in jeans, and I think it's going to be improving as we move throughout the year."But all mill executives are expressing caution, noting that despite the uptick in business, it still isn't as strong as it was in 1991 -- immediately following the Gulf War -- or in the early stages of 1992.
"I think 1994 is going to be a good year, but still, not an overwhelmingly great one," said Dutch Leonard, president of Burlington Denim. One way to gain and maintain an edge, Leonard said, is by working closer to both consumers' and retailers' buying habits.
"We've been addressing that and will continue to do so," Leonard said. "Whether it's through Quick Response programs or through strategic partnering, it's something the whole denim chain has to embrace."
Leonard also said new products would keep the category fresh for both retailers and consumers.
"The things we've come out with over the past couple of years, such as Tencel denim [a blend of cotton and Tencel, Courtauld's cellulosic fiber] and some newer things such as Stone Free [a dyeing process developed by Burlington that eliminates significant amounts of effluence in the laundering process]," Leonard said. "But we are always working on things. You have to keep interest."
Among some of the other new products mill executives said were getting good response are Swift Textiles' Paris Black fabric, a heavyweight brushed twill from Thomaston, and ring-spun and ring-spun-like products from Cone Mills.
"Denim makers are looking for anything that has a surface interest," said John Hudson, president of Avondale Mills, which has produced some herringbone and uneven yarn looks, "which are going to be strong for spring 1995."
"Shorts, too, are looking to be a healthy product category," said Cone's Gene Trout, vice president in the firm's denim division. (See related story on page 12.) "They've been the biggest growth category for the industry. It's been especially healthy in the heavier weights, making them almost a year-round product."
"We all have to be much smarter about the way we run our businesses," Swift's Heldrich concluded. "The idea is to give the consumer what they want, and not to tell them what they should buy. You're never going to be successful in the long run like that."
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