Ronald Friedman, Co-Leader, Retail/Consumer Products Industry Group, Quoted in California Apparel News Article, "The U.S. Dollar Is on Fire: The Pros and Cons for U.S. Apparel Manufacturers."
California Apparel News
By Deborah Belgum
Excerpt:
The U.S. dollar is sailing at a 12-year high. A strong greenback means that if you travel overseas, hotels and restaurant dinners are cheaper. It also means raw materials produced overseas, such as fabric, zippers and buttons, have suddenly gone on sale.
But if you were one of those U.S. apparel manufacturers who widened your market by selling overseas, you might be facing some financial headwinds this year.
For example, Levi Strauss & Co. in San Francisco noted recently that its fourth-quarter revenues would have grown by 10 percent, but with various currency declines, it rose only 7 percent.
Nike, the athletic apparel and shoe company in Beaverton, Ore., has grown to be a global company with more than 50 percent of its sales coming from overseas. Its executives recently said there might be some financial pushback this year with a strong dollar creating a drag on revenues.
Our export clients at Marcum are primarily branded manufacturers, who tend to be less hard hit by fluctuations in currency rates than commodity product manufacturers.
Their sales are driven as much by the brand as by the product, and the product is a high-quality, high-demand item. The market for these products tends to remain stable longer.
The rise in the dollar will certainly increase the cost of products manufactured in the United States for foreign consumers, but our clients’ customers are not as price sensitive, and they have more disposable income.
On the other hand, U.S. manufacturers that import product from overseas will see their costs reduced as the dollar gets stronger.
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