NEW YORK — Sourcing powerhouse Li & Fung Ltd. said Thursday its first-half income rose 21.2 percent, outpacing an 8.8 percent sales gain.
The Hong Kong firm attributed the margin improvements to its strategy of offering a wider array of services beyond its traditional model of buying and selling imported goods. The firm now handles more design and merchandising functions and is beginning to get into the licensed brand business — a move that allows for greater profitability than its core business.
On the apparel front, this year the company has landed the rights to produce Levi Strauss Signature tops and men’s Levi’s Red Tab tops. In an interview at its New York office, Rick Darling, president of Li & Fung USA Ltd., said the company was in discussions with Official Pillowtex LLC, which owns the trademarks of the defunct home textiles company, to license the Cannon brand.
Darling noted the first-half results don’t reflect sales of its licensed products.
“We just shipped Levi Strauss Signature three weeks ago,” he said, adding it will continue to seek brands to license. “The strategic plan is for things to be balanced between apparel and nonapparel.”
Li & Fung’s growing relationship with San Francisco-based Levi Strauss & Co. has led to speculation that it might acquire the Dockers brand, which Levi’s put on the block in the spring. Darling said he “really can’t comment” on the Dockers matter.
All of the company’s recent major acquisitions have been of other sourcing firms, though executives have said it would consider buying brands, as well as licensing them. In a statement Thursday, the company said regarding acquisitions, “The group is still continuing to evaluate other opportunities.”
Li & Fung’s profits attributable to shareholders came to $502 million Hong Kong, or $64.5 million U.S., for the half, up from $414 million Hong Kong, or $53.2 million, a year earlier. Revenue was $19.7 billion Hong Kong, or $2.53 billion, up from $18.1 billion Hong Kong, or $2.32 billion. All figures have been converted from the Hong Kong dollar to the U.S, dollar at average exchange rates for the corresponding periods.
This story first appeared in the August 13, 2004 issue of WWD. Subscribe Today.
Separately, the firm said it had promoted executive director Bruce Rockowitz to the new post of president of Li & Fung (Trading) Ltd., its principal business. It also hired Robert Adams to fill the new post of chief operating officer. Adams will also hold the chief financial officer post, succeeding Frank Leong, who Li & Fung said will be retiring and moving back to his home country of Malaysia.
Darling said the new executive posts were made necessary by the company’s aggressive growth in recent years.
“This is probably the most significant management change the company has made,” he said. “This business is now almost a $6 billion business.”
Li & Fung last year reported revenues of $42.63 billion Hong Kong, or $5.47 billion. That’s more than double its 1999 level of $16.3 billion Hong Kong, or $2.1 billion.