As cotton prices, which surged to historic highs last spring, ease, makers of T-shirts and jeans are revisiting the pricing for the upcoming summer collection.
Propelled by bad harvests in states like Maharashtra, Karnataka, Telangana, Gujarat and Madhya Pradesh, prices of cotton hit highs over the last year past Rs 1 lakh per candy (356 kilograms) and were propelled by the ensuing demand-supply gap.
According to South India Spinners Association, since its peak to about Rs 60,000-65,000 per candy, cost of input for the apparel industry has fallen 40 per cent, but the prices remain higher than the pre-pandemic rates of Rs 42,000-45,000.
Softer prices on cotton have still bright relief for apparel companies which spent 2022 dealing with higher costs and how much could be passed on to consumers and protect margins. Lower prices on merchandise tags are not expected until late summer this year.
“The winter stocks did not get the benefit of any lower yarn prices as purchases are booked at least two to three months in advance,” said Anant Agarwal, chief financial officer, V-Mart Retail Ltd., in a post-earnings call.
“There may be marginal relief available in summer 2023, but as is the practice, it will be passed on to the customers in entirety as we would want to remain very competitive in the value retail pricing segment,” he said, adding that yarn prices have come down from their peak by 30 per cent since September but they are still 30 per cent to 40 per cent higher than the pre-Covid level.
Deepak Bansal, managing director, Cantabil Retail India Ltd., also said that their upcoming summer collections starting May will have lower price tags.
Some companies, however, will decide over the coming weeks whether they can continue to charge more for their T-shirts, denim jeans and underwear allowing them to widen margins, or to pull back and give consumers a break.
