Li & Fung hit by restructuring costs
Operating profit falls 42%
Recent restructuring costs in the US have cost Hong Kong based Li & Fung. The global sourcing company saw its operating profit drop by 42% to $511m in 2012. Despite this, turnover for the year saw a marginal improvement, climbing 1% higher than the prior year to $20.22bn. In the US, the company markets products for retailers including Walgreens, Kohl’s and Macy’s. It is also the owner of personal care company Lornamead, which manages a portfolio of traditional and heritage US, German and UK personal care brands such as Finesse, CD, Aqua Net, Yardley and Lypsyl.
Commenting on profit loss, Bruce Rockowitz, Group President and CEO of Li & Fung Limited, said, “We recognised that our biggest management challenge was the restructuring of LF USA, which became more costly than originally envisioned. We took swift, decisive action to address the issue and also introduced strict cost control measures across the group.”
He added that the global economic environment in 2012 had been “more demanding than expected” with the company’s retail business heavily impacted by declining consumer sentiment in the US and Europe.
“Despite this market condition, we are encouraged by the number of new customers attracted to us for the scale and depth of our operations. We believe the trend for outsourcing will continue as more and more retailers and fashion brands appreciate the competitive advantages offered by one-stop-shop supply chain solutions,” he concluded.
