Short-sheets may make for a frosty wintertime
December 15, 2003-- Home Textiles Today,
Volume sheet suppliers are warning there may be product shortages in mid-winter and early spring, particularly on replenishment goods, as manufacturers are increasingly refusing to accept orders without price upgrades.
The hike in cotton pricing has driven the cost of finished sheets up by as much as 15 to 20 percent. From spinners to weavers, production facilities overseas are demanding that their customers share the burden. With the last bales of 2002's low price cotton running out, many are taking a short-term approach to contracts before breaking open loads of September's much pricier cotton.
"There are many people who will not take orders nor quote for more than a few weeks at a time, making it extremely difficult to plan programs with retailers," said Sandy McNeil, president of fashion bedding at Hollander Home Fashions.
"We own greige goods and are [therefore] not stuck, but I know this is happening from a quote standpoint and have heard horror stories. We are trying to secure business going forward and it is very difficult to quote when we cannot get pricing."
Greige producers are facing their own product shortages as some foreign spinning operations have shut down temporarily, unwilling to produce yarn at a loss. It's not that product doesn't exist, suppliers say, it's that producers of quality product are walking away from low-cost business.
"There are quality issues and service issues, and they're really both quite compelling," said Gary Lyons, president of Lyon International, which sources greige and some finished roll fabric. "We have been faced with this for the past four months."
Added Jeff Jacobs, executive vp at Keeco, "There is more demand coming out of the Pacific Rim region now. If people don't have contracts already established for greige goods, they might experience some temporary shortages."
The pricing crisis strikes at the heart of the replenishment sheet market, goods in the 200-count to 300-count range, which already sell at low margins.
Pradeep Mukherjee, export vp at Bombay Dying in India, noted that last year pricing on finished sheets declined 10 to 12 percent because of cheap cotton prices.
"Now part of this drop should come back up by seven percent. But our trade partners say retailers will not give any increase, even though they had reasonable margins in 2003," he said. "As far as our company is concerned, we are being forced out of the 230- to 250-count range, where the market size is the largest and where we had built up a good business in the last few years. We will probably manage by diversifying into other markets, where we already have a presence. However, other exporters who have built facilities and organizations to cater only to the U.S. will suffer."
Suppliers told HTT that customers are accepting modest increases here and there, mostly on new orders. The real battle is being waged over replenishment goods.
"I know a few converters and importers in the US that have negotiated small price increases," said Amir Muhammad, president and ceo, Empire Impex, which provides sourcing services to the home textiles industry. "I have seen that most large manufacturers have kept their commitments, whereas small and medium enterprises have closed down because they are not able to sustain such losses."
Suppliers' insistence on pricing relief for 200-count to 300-count follows three successive years of price cuts for a group of products that has rapidly become commoditized. It's a downward spiral that is now beginning to skew higher count sheets.
"Retailers want an assortment of pima, Egyptian, cotton-rich blends as well as a variety of thread counts and use these words to create a buzz with the public. But it may be time for the whole industry to look at the cotton for what it really is as well as its individual properties," said Avi Gross, president, Divatex.
Keeco's Jacobs concurred. "If it's an equal choice of products that have better fibers versus those with higher thread counts, retailers will go with the higher thread counts almost always," he said.
David Kahn, president and ceo of Croscill, added, "If there's ever a standard, the price goes down. I also get the impression that the over-use of Egyptian cotton is hugely devaluing it."
Charles Schlang, director of business development at Haywin, noted that 400-count sheets are being incorporated into mass-market assortments along with better sateens and 100 percent cotton sheets. It's "just the natural evolution in brands and private label," he said.
"The sateens have really been taking over the market in the last three to fours years," said Joe Gleicher, president of Poly-Commodity. "Realistically, the standard becomes what the stores demand as a minimum requirement from sheet manufacturers. And 230-count is the base for promotional sheets as well as the most popular type of sheet in 2003 and 2004."
"I think 2004 will be an incredible year of change in terms of implications to trade law, the economy, continued focus on price, raw material costs, etc.," said Bob Dale, president of the bed and bath division at WestPoint Stevens. "I think many people are finding that they need to improve their return on investment and add new product categories. Inventory turn is very important now. Quality will become more so, and brand may become the biggest distinguishing factor."
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