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Fashion Retailer Warns Of 'tidal Wave Of Inflation'

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i have to give a big thanks to all the smart people on here that a year ago predicted this.

One of Scotland's leading fashion retailers has warned a "tidal wave of inflation" is about to break over the clothing sector.

Iain McGeogh, majority shareholder of the M&Co chain of shops, said the start of this year was looking "very tough".

He blamed rising cost pressures and the increase in VAT from 17.5% to 20%.

Mr McGeogh said the increase in tax from 4 January was set to be overshadowed by other pressures, from cotton prices to freight costs.

He also told BBC Radio Scotland's Business Scotland programme it was "a terrible mistake" to allow people to stay on in jobs after the age of 65.

He claimed workers from that age could be less productive and make it more difficult for younger people to find jobs and develop their careers through management.

Mr McGeogh, who has long kept a very low profile, has built up Mackays into one of Scotland's largest private companies. A pawnbroker from the 1830s, it has been in family hands since 1961, since when it has built up a strong position in value fashion retail.

He bought out his brother's share and, in 2006, changed the name to M&Co.

Headquartered at Inchinnan in Renfrewshire, the chain now includes 300 stores throughout Britain, employing more than 3,000 people, typically in market town shopping streets.

With its online business, it claims to have 11 million customers. Its most recent accounts, for the year to last February, showed revenue rising to £182m, with pre-tax profits up sharply to £10.4m.

The company is now developing a franchise operation in China.

Discussing the year ahead, Mr McGeogh said: "I think there's going to be a tidal wave of inflation coming through. Next [a rival fashion chain] have been talking about 7% or 8% prices increases, and that is happening. There will be more increases after that.

"We've got cotton price increases, acrylic price increases, labour increases in producer countries, freight costs have doubled. So at the end of the day, VAT is not really a major issue."

Mr McGeogh said the inflation in garment manufacturing was largely explained by extensive factory closures in China, as workers shifted to more lucrative electronics work.

'Terrible mistake'

In the radio programme, Mr McGeogh also criticised recent moves allowing people to choose to stay at work after 65, even if their employers would prefer them to retire.

He said the change was "a terrible mistake".

He continued: "I happen to be 65, so I can say it. I'm not planning to retire, I have no problem with anybody who is fit and able and full of energy working on, but I have a problem with those whose ability is diminishing and speed of execution is slowing up, saying 'I want to stay on', and having full employment rights.

"Where do you get the young people coming into the system? Where does the management progress through?"

Iain McGeogh's comments can be heard on BBC Radio Scotland's Business Scotland programme at 1005 GMT on Sunday. They can be heard again on the iPlayer for a week, or downloaded as a podcast.

The programme includes discussions with Caroline Donaldson, of Kynesis business consultancy, Frank Blin, senior partner at PricewaterhouseCoopers, and Martin Togneri, formerly head of Scottish Development International.

from the ******* bbc

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overshadowed by other pressures, from cotton prices to freight costs.

Can anyone tell me where is it coming from? (I've give you three guesses) Have anyone taken a looksee at the Baltic Dry Index verses the CRB index recently :ph34r:

bdi_crb.gif

post-13113-0-03981700-1294560608_thumb.gif

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He also told BBC Radio Scotland's Business Scotland programme it was "a terrible mistake" to allow people to stay on in jobs after the age of 65.

And the alternative is? Oh, I forgot - adequate pension provision has been made.*

* which wouldn't solve the problem anyway

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Dammfoolman: "Have anyone taken a look see at the Baltic Dry Index verses the CRB index recently "

Looks like prices are going up and volumes are going down..

Question is will demand keep dropping and commodities crash, or is demand really going to pick up as we "recover".. :unsure:

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Can anyone tell me where is it coming from? (I've give you three guesses) Have anyone taken a looksee at the Baltic Dry Index verses the CRB index recently :ph34r:

bdi_crb.gif

Hope you are not suggesting the fed policy of printing us to prosperity has led to people trying to seek shelter in the commodities.

However 'easy come easy go', we need the FED to do what it did in 08 and crash the markets again to temper the inflation expectations.

The watchwords for this manipulated mess we call our financial markets is volatility.

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Chris c-t: "This is the wrong question IMO. China and others will buy what we cannot affford (commodities-wise) - that is where the demand will come from eventually."

That is an interesting argument (I personally see a lot of reason to believe demand from the east will pick up relative to the west). My problem is that I am ignorant of how the BDI is calculated.

I know that it is based on shipping costs, but I'm not entirely sure if it covers all shipping routes and how it is weighted. For example, if eastern demand is increasing to replace western demand, then wouldn't the BDI still be high due to increased demand on shipping from South America and Australia etc? Or would the drop across the pacific to the US be enough to screw up the figures even if trade around the far east etc is actually increasing?

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If they are going to crash the markets... assuming they have the power to do so... then they had better do it soon...

If you listen to Marc Faber you will have noted that in recent days that he has said that a market correction is coming probably sometime in January... but that he sees it as a buying opportunity...

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The BDI does not tell the whole story!

In 2010 a massive road was finished in Russia the Amur highway. When I rode ths road it was mostly gravel. But at the M56 Lena there was a massive junction which led to China. So some of the frieght instead of being taken to Vanino or Vladivostok is driven across the border instead.

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Chris c-t: "This is the wrong question IMO. China and others will buy what we cannot affford (commodities-wise) - that is where the demand will come from eventually."

That is an interesting argument (I personally see a lot of reason to believe demand from the east will pick up relative to the west). My problem is that I am ignorant of how the BDI is calculated.

I know that it is based on shipping costs, but I'm not entirely sure if it covers all shipping routes and how it is weighted. For example, if eastern demand is increasing to replace western demand, then wouldn't the BDI still be high due to increased demand on shipping from South America and Australia etc? Or would the drop across the pacific to the US be enough to screw up the figures even if trade around the far east etc is actually increasing?

Especially as we hear stories of ships moored off Hong Kong idle and indeed bulk carriers being cancelled, due to the Australian floods (mines inaccessible).

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i have to give a big thanks to all the smart people on here that a year ago predicted this.

One of Scotland's leading fashion retailers has warned a "tidal wave of inflation" is about to break over the clothing sector.

What did you do? Buy lots of clothes last year?

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Clothing retailers must have one of the highest margins of any sector. How much does a £40 pair of jeans or a £20 T-shirt cost to make?

Fourpence.

And a 50% reduced life expectancy for the kids that make them. (No economic value)

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I personally think retailers like Next are warning of increasing prices - big increases - because they know less people will be spending in 2011. The only way to maintain their profits from a smaller grouper of buyers will be to get more money from them.

The affect, I believe, will be to force people to cheaper stores and brands. Perhaps Primark shares are a buy?

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Items are still a pound in the Poundstore!!!! (although they may be a bit smaller....)

Like this man's vest :D

FF5E29A3-A1AB-F390-1BCBFE2B4CA90ECE.jpg

damn this quotes thing. Sorry the text isn't at all funny :(

Edited by non frog

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Clothing retailers must have one of the highest margins of any sector. How much does a £40 pair of jeans or a £20 T-shirt cost to make?

I refuse to buy those ridiculously expensive $50 shirts that are made in china at the shopping centres.

Shop online you can find cheap USA made clothing quite easily , i've been picking up US made t-shirts for $8 each and the quality is easily superior to the thin Chinese shirts they sell at ridiculous prices.

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I personally think retailers like Next are warning of increasing prices - big increases - because they know less people will be spending in 2011. The only way to maintain their profits from a smaller grouper of buyers will be to get more money from them.

The affect, I believe, will be to force people to cheaper stores and brands. Perhaps Primark shares are a buy?

The Next trading statement on 5th Jan said they blame the snow on a £22m drop in expected sales (nothing to do with their prices being too high and going up another 8%). They don't yet understand the impact of rising prices on demand. But they aren't worried about profits as they are opening more stores.

More stores to sell stuff they aren't sure there will be demand for due to rising prices?

"We estimate that we lost £22m of full price sales as a result of the snow.

The outlook for 2011 is uncertain. The impact of Government cuts on consumer spending is still unclear and we have yet to fully understand the impact of rising retail selling prices on overall demand. We reconfirm that our own prices will be increasing by circa 8% as a result of higher input costs and the rise in VAT. Our best guess is that price rises will moderately suppress like for like sales, though we believe this will be offset by the addition of profitable new Retail space and continued growth of Directory’s online business."

Never mind their top people are still raking it in:

Executive directors

S A Wolfson 2010 1,737,000 2009 831,000

C E Angelides 2010 980,000 2009 585,000

D W Keens 2010 936,000 2009 560,000

A J Varley 2010 789,000 2009 423,000

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Clothing retailers must have one of the highest margins of any sector. How much does a £40 pair of jeans or a £20 T-shirt cost to make?

I am told that a Boss suit is made in a factory in China and they start at $60 wholesale!!

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I am told that a Boss suit is made in a factory in China and they start at $60 wholesale!!

A friend of mine just returned from Hong Kong where she purchased loads of surfing sweat shirts and teas for fractions on the Pound compared to what we pay here. Apparently the factories that make them are just across the 'border' in some big industrial park in China and many of the items now make their way into Hong Kong.

Apparently there is little need to fake such items nowadays as they can legitimately get their hands on the real things.

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One of Scotland's leading fashion retailers has warned a "tidal wave of inflation" is about to break over the clothing sector.

"About to" :lol::lol:

Some brands of shirts in for example John Lewis were only about £60- 70 a couple of years ago and now they're getting on for about £120. Even Primark have doubled a lot of clothing prices in the last couple of years.

So there's no "about to" about it.

Inflation still under control of course - and that's official.

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I refuse to be bullied into all this talk of high clothing and fashion prices......People who want it will always pay the going price, that is the gullible market they are relying on......others will see it for what it is and do things differently. ;)

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Is it just me, but

I don't recall M&Co being a fashion retailer

tim

they dont do brands, but infact they do sell a lot of better quality generic stuff, also they have positioned themselves in a lot of places where there are no big name shops. places like inverurie,stornoway,fort william,huntly ect. pretty smart idea realy, they are in most of the 10,000- 20,000 size places in scotland, they keep away from the cities.

lot of there stuff is expensive but of good quality

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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