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.
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