Going forward, apparel companies are in a particularly tough spot, caught between uncertainty about the consumer and a sharp increase in raw material costs.
Benchmark cotton prices have more than doubled over the past year, leading retailers to raise prices on spring-season merchandise starting to hit stores now—even though they're not sure if shoppers will stomach the increases.
...Teen retailer Aeropostale Inc. is also keeping inventories lean. "Spring is tight," CEO Tom Johnson said this week. Aeropostale lost market share during the holiday because of steep discounting at higher-priced brands such as Abercrombie & Fitch Co. The company expects to raise its prices between 3% and 5% for spring, Mr. Johnson said.
Phillips-Van Heusen Corp., which includes Tommy Hilfiger and Izod, said this week its prices could increase by as much as 15% in the second half of the year. Warnaco Group Inc., maker of Calvin Klein jeans and underwear, also expects some price increases.
If commodity prices continue to rise in tandem with stock prices it will eventually cause problems. We are already seeing food riots in parts of the World. What would happen to our debt driven economy if inflation led to higher interest rates?