Back-to-School 2011: 4 Items That Will Cost More


NEW YORK (TheStreet) -- Unless you are living under a rock, the threat of higher prices during the back-to-school season has been a looming dark cloud.

Families can expect to spend up to 25% more this year on school supplies and extracurricular activities, according to the 2011 Huntington Backpack Index conducted by Huntington Bank. This is, by far, the largest annual increase in the index in its six-year history.

Huntington surveyed national chain stores and found that parents of elementary students can expect to pay an average of $530 this year to cover the list of supplies and school fees, an increase of 12% from $474 last year.

For students in middle school, costs will surge 25% to $682 and expenses for high school students will jump 9% to $1,094 on average.

These price hikes aren't slipping by unnoticed. While 86% of households surveyed by Deloitte said they expect to spend more on back-to-school merchandise this year, nearly 30% also said prices are higher than last year.

Some of the biggest price increases, of course, are taking place in apparel as retailers attempt to offset lofty cotton prices earlier in the year.

From January until May, the NPD Group noted that average prices in the apparel market rose more than 5%.

But exactly how will this translate to your wallet? Here's a look at what items you will have to pay more for this back-to-school season:

Brown-bagged lunch

Sending your children off to school with a healthy lunch and snacks may prove more costly this fall.

Kellogg (Stock Quote: K), Kraft (Stock Quote: KFT), Smuckers (Stock Quote: SJM) and Heinz (Stock Quote: HNZ) are among the companies that recently have announced price hikes on some of their brands.

Kellogg expects commodity costs to rise 8% this year and sees a "fairly significant" rise in costs next year as well. As a result, it has planned more aggressive price increases on cereal, snacks and other food products, expecting price hikes between three and four percentage points.

The company is also offsetting rising costs by reducing discounts, introducing new items at higher prices and shrinking its packaging.

Heinz has raised prices on its signature ketchup and Ore-Ida potatoes. The company has said the prices of almost everything it puts in its products has increased and it needs to offset those.

Kraft said it is facing higher prices for dairy used in cheese (milk prices have spiked more than 40% this year), coffee used in Maxwell House and wheat used in Wheat Thins crackers.

Low-price leader Wal-Mart (Stock Quote: WMT), which carries many of these brands, raised prices on a number of grocery items earlier in the year, specifically on dairy and meat.


Sneaker prices are running up.

Foot Locker (Stock Quote: FL) already has raised some prices and said during its first-quarter conference call that more are coming.

"We expect that there will be price increases coming in our industry. The effect will increase in the latter part of the year, and we're working to ensure retail prices increase only in the targeted sensible ways," said CEO Kenneth Hicks. "We believe these price increases will, in general, be accepted by our customers despite the macroeconomic headwinds."

In February, Nike (Stock Quote: NKE) introduced a women's version of its "Dri-Fit Legend" T-shirt for $22, a $2 increase from its men's version. This is an example of the "surgical" price increases Nike has taken of late that will continue into the fall.

But the sneaker giant won't substantially increase prices until spring 2012. The increases will be across most merchandise and items.

Under Armour (Stock Quote: UA) is following suit.

"In addition to select retail price increases in fall/winter 2011, we are looking at more broad-based pricing increases commencing in spring 2012 to help mitigate some of these pressures," Chief Financial Officer Brad Dickerson said during the company's first-quarter conference call in April.


Denim's reliance on cotton will make it noticeably more expensive.

V.F. Corp (Stock Quote: VFC), which makes Wrangler and Lee jeans, among others, has said it expected high single-digit-percentage price increases, with the pace of these hikes even higher in the second half of the year.

V.F. Corp's jeans are sold everywhere from J.C. Penney (Stock Quote: JCP) and Kohl's (Stock Quote: KSS) to Wal-Mart and Target (Stock Quote: TGT).

Cotton represents about a quarter of the cost of a pair of jeans, and since back-to-school merchandise was ordered when the price of the fiber was at its peak, denim makers and retailers will be looking to offset these costs.

Children's Place (Stock Quote: PLCE) CEO Jane Elfers said during the company's first-quarter conference call that cotton prices were at record highs when it placed orders for back-to-school and holiday.

As a result, prices on clothing will be up by about $1 to $2.

Phillips-Van Heusen (Stock Quote: PVH), whose portfolio includes Calvin Klein, and most recently Tommy Hilfiger brands, has boosted prices by as much as 10% this year.


Going commando might seem like the best bet this fall, as T-shirts, socks and underwear become pricier.

Hanes brands (Stock Quote: HBI) has undertook two price hikes this year and plans to continue raising prices throughout the remainder of the year.

Overall, Hanesbrands items, which are sold at big-box chains like Wal-Mart and Target, are about 30% more expensive than last year.

Warnaco (Stock Quote: WRC), which makes Calvin Klein underwear, has also passed on the higher cost of cotton.

If you don't want to spend more on tighty whities, you can always wait until the holiday season. Hanesbrands said it is already working with retailers on Black Friday promotions.

The plan is to offer attractive prices that would drive margins lower but boost volume.

—For more back-to-school coverage, visit MainStreet’s “Back to School” topic page for our latest coverage!

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