US denim firm Levi Strauss has told just-style it is too soon to assess the impact of rising cotton prices on its own pricing structure.
The company, one of the industry’s largest cotton purchasers, said it will take up to a year before it can reflect on the changes and adapt its retail approach.
A spokesperson for the company said: “While prices may have gone up recently, we contract for finished products in advance, so any effect of cotton prices on the cost of goods sold in the current quarter reflects cotton prices of roughly 6 -12 months ago depending on the lead time.
“We will see the impact of recent increases in raw material price trends later this year and are taking appropriate pricing actions where necessary.”
It follows recent hikes in raw material costs in Asia during recent months, particularly cotton. Prices of cotton neared a historic peak in China – the world’s largest importer of cotton – in June as the market reacted to a sudden recovery in demand after the downturn.
Levi’s added: “We have been consistent in saying that cotton price is only one of many inputs that impact the future cost of goods. Given the many variables that go into product costs, it is premature to speculate on the long-term implications of the cotton prices we are seeing today.”
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