“The industry is in turmoil.” That was the assessment of Ronny Wurtzburger, president of Peerless Clothing International, as he addressed the outlook for the tailored clothing industry next year.
Price increases on cotton, wool and polyester, coupled with a decrease in production capacity in factories overseas, is expected to add $10 to $20 to the wholesale cost of most suits by fall 2011, he said.
Additionally, the economic uncertainty that still lingers in the U.S. continues to impact manufacturers and retailers seeking to boost sales. “Tailored clothing is necessary but not crucial,” said Jim Ammeen, president and chief executive officer of Neema Clothing. “It’s a postponable purchase.”
Despite the challenges, manufacturers believe that by offering fresh fabrics, silhouettes and detailing, men will be stimulated to add to their wardrobes next year.
“Buying piece goods for next season is like playing the stock market,” said Wurtzburger. “You call for a price every day, and every day it’s different. If it were the stock market, we’d be happy, because it’s only going up.”
Wurtzburger said the price of worsted wool has risen $1.30 to $2.50 a meter, while polyester/viscose is up 45 cents to 65 cents.
“The biggest problem we have is how to service a customer [retailer] who has been selling product at the same price for nine years,” he added. “Prices have only been going down, but we just can’t absorb the increases anymore.”
Ammeen is projecting that wholesale prices of suits and sport coats will rise 10 to 15 percent by fall. “All of the ingredients in the garments are going up in price,” he said. “But we don’t have inflation at the counter. We only have inflation at the wholesale level. The pipeline’s going to burst, and the question is whether we can pass it along.”
Most retailers are already anticipating the hikes. In its third-quarter earnings call earlier this month, Neal Black, ceo of Jos. A. Bank, said: “We are now seeing significant cost price inflation late in 2011, particularly in raw materials such as cotton and wool, with cotton prices being the most problematic. Ultimately, all retailers are in the same boat and…the result will be ticket-price increases in 2011.” The company projected prices will rise in the single-digit range.
Men’s Wearhouse also is poised for price increases. In its third-quarter call last week, president Doug Ewert said: “We are experiencing cost increases for the third quarter of 2011 deliveries in the low-single digits to low-double-digit range on select product categories. We have a few levers to help mitigate the impact on our margins, including shifting the balance between designer brand and private branded businesses, counter-sourcing with alternative mills and factories, consolidating our suppliers and by selectively raising our retail prices. It’s our strategy to pull on each of those levers in moderation.”
Wurtzburger said in addition to raw material costs, many manufacturers are losing 15 to 25 percent of their production capacity in Chinese facilities as plants there turn their attention to producing goods for their own growing consumer base. “They’re working more for China and less for the world.”
This is also curtailing the ability of manufacturers to provide department and specialty stores with fancy models. “In the past, a store could test 300 units of a fancy fabric, but now the Chinese factory wants 1,000 to 2,000 units,” he said.
Adding to the problem is retailers are hesitant to place orders far in advance, leaving manufacturers in a position where they will have to scramble to fill orders. “We buy against orders,” Ammeen said, “but no one wants to own goods 12 months out.”
Nevertheless, both Ammeen and Wurtzburger believe vendors who find a way to produce “interesting” items will be successful next year. “I have a strong feeling about vested clothing, and peak lapels will play a stronger role,” Wurtzburger said.
In addition, the sport coat business in stores is excellent and that’s not effected as much by the price increases. Lamb’s wool will be popular, and the trendy military styling seen first in designer collections is now “trickling down to the masses,” he said.
Ammeen said his company will offer “exciting fashion, modern fit and a more flattering silhouette, something they don’t have in their wardrobe.”
The company’s hybrid jackets from Kroon, which meld sportswear styling with tailored construction, continue to perform, he said, as do the reinvented Haspel collection, which is offering a new premium collection for fall with brushed cottons, washed finishes and softly constructed coats.
Reinvention is also the name of the game at the HMX Group. Joseph Abboud, president and chief creative officer for the company, said 2011 will be the year of “creative courage” for manufacturers and retailers. By stepping out of the box, HMX has seen bookings increase in the mid-double digits over last year, he said.
“Let’s get back to understanding the beauty within men’s tailored clothing. It has gotten so homogenized, but there’s a chance for retailers to turn on the tailored customer with new models, details such as trims and pocket treatments and new fabrics,” Abboud said.
To that point, he said HMX will introduce a new “raw cashmere” fabric, developed in cooperation with Loro Piana, that will provide “the ultimate in rugged luxury. It’s light in color but it’s not safe,” he said, noting that the brand will offer raw cashmere knitwear, as well, to create a comprehensive program. Additionally, fabrics with a “blown finish” that provide “a more sweatery feel” will be used for soft, unconstructed sport coats.
“These [moves] are aggressive, and they should be,” Abboud said. “It’s about getting guys to buy vested suits with hacking pockets, double-breasteds, peak lapels. These new models are subtle and not ‘in your face.’ But they offer a lot of details.”
Abboud said he also created a Best of Britain subcategory for Hickey Freeman offering heavy, rich fabrics from Scotland. “They’re heavy, but we’re not defensive about it,” he said. For Hart Schaffner Marx, Abboud is offering more washed corduroys and moleskins, things that “don’t fit into traditional tailored clothing.”
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