News in the early morning of March 25th, Beijing time, the Wall Street Journal reported on Tuesday that European fast-moving consumer clothing retailers are facing increasing pressure to increase pricing, otherwise they will suffer from increased outsourcing costs caused by the continued strength of the U.S. dollar. Suffer a loss in profits. This is also another follow-up impact of the recent dramatic exchange rate changes on the corporate world.
Many large European manufacturers and exporters are celebrating the fall in the euro against the dollar, including many luxury goods manufacturers. The continued decline in the euro’s exchange rate over the past few months has caused their costs to drop significantly, making their products more competitive in export markets such as the United States. But for some large clothing retailers that outsource production to Asia, they calculate production costs in dollars and sell in euros. Exchange rate fluctuations naturally mean greater disadvantages for them.
Swedish clothing retailer H&M warned on Tuesday that a stronger dollar could lead to higher purchasing costs for the company for the rest of 2015. However, this financial report also shows that the company still achieved profit growth in the first quarter.
Nils Vinge, head of investor relations at H&M, said in an interview with the Wall Street Journal, “Many competitors need to increase prices, so we have this choice: increase prices along with them, or keep prices unchanged. changes, compressing our profit margins. It’s entirely up to us.”
Credit Suisse Group AG analyst Simon Irwin estimates that H&M’s input costs in euros may increase by 18% in the next 6-9 months, and the company may need to increase prices in the second half of 2015. 3.2%, and will increase by another 4.5% in 2016.
Some analysts pointed out that compared to other competitors, H&M is much more exposed to the rising US dollar exchange rate. Most of the company’s outsourcing costs are calculated in US dollars, but half of its sales are in euros. . Richard Chamberlain, an analyst at Royal Bank of Canada Capital Markets, pointed out that about 80% of H&M’s products are produced in the Far East, and most of the suppliers of these international brands accept payments in US dollars.
