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Levi’s expects product prices to rise by 1 per cent


Levi’s has negotiated cotton prices for the first half of 2022 and expects cost of products to increase 1 per cent in the first half of 2022 compared with 2021 levels. For the second half of 2022, the company hopes to negotiate prices to a mid-single-digit percentage increase compared with 2021 levels.

Reports suggest, the 18 per cent rise in cotton prices over the past month has sent Levi’s shares down 5.1 per cent while the S&P 500 index has increased by 0.4 per cent. Share prices of fast-fashion retailers H&M and Inditex too have declined by 4.9 per cent and 4.6 per cent, respectively, while Gap’s share prices fell 2.2 per cent.

Levi’s average selling prices have increased more than 10 per cent compared to 2019 while gross margins have surged 10 percentage points compared to a decade ago, during the last cotton price surge. The brand’s gross margin in the last quarter grew almost 5 percentage points compared to pre-pandemic levels. On the other hand, gross margins of Hanesbrands grew just 0.6 percentage points in its last quarter compared to pre-pandemic quarter, while Zara owner Inditex’s margins increased by just 1.5 percentage points.