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Li & Fung Acquires Fishman & Tobin and Crimzon Rose

On Thursday, the Hong Kong-based sourcing giant posted a 16 percent decline in first-half profits.

By
with contributions from Ellen Sheng

Li & Fung Ltd., the Hong Kong-based sourcing giant, on Thursday posted a 16 percent decline in first-half profits, and said it acquired children’s apparel firm Fishman & Tobin Inc. and costume jewelry company Crimzon Rose International.

Both acquisitions of American firms will fall under the LF USA umbrella. Terms of the two deals were not disclosed.

Fishman & Tobin is seeking to expand its licensing business in children’s apparel and men’s tailored apparel, while Crimzon is gearing up for the unveiling of a jewelry line under the Jennifer Lopez Collection set to make its debut next month at Kohl’s.

Investment banking sources expect Li & Fung to do at least one or two more transactions by yearend.

Rick Darling, who heads up LF USA, was traveling back to the U.S. from Hong Kong Thursday and could not be reached for comment.

First-half profits fell to $236 million. The company said the decline was due to higher operating expenses from recent acquisitions. Revenue for the first half of the year rose 33 percent to $8.8 billion, helped by growth in all three of its business units: trading, logistics and distribution. All figures are in U.S. dollars.

Shares of the company, a major supplier to U.S. retailers, have plummeted nearly 70 percent over the last three months amid concerns about a weak U.S. retail outlook and consumer confidence.

Li & Fung’s chief executive officer and group president Bruce Rockowitz said at a news conference in Hong Kong that despite the gloom he remains confident about the company’s outlook and three-year plan, targeting core operating profit of $1.5 billion by 2013.

“I feel confident despite what is going on in the world,” he said. “I don’t see market improvement during the three-year plan, that’s what we’re planning for.”

Rockowitz said the company has the top line and margin growth it needs. “Now it’s about rationalization and integration and putting everything together,” he said.

In June, the Asian firm bought Loyaltex Apparel and TVMania, a European supplier of TV character-branded apparel. The company also made a number of smaller acquisitions of companies, such as Beyond Productions, which manages all of Beyoncé Knowles’ brands and Celissa.

Allan Ellinger, senior managing partner of Marketing Management Group, the financial adviser to both Fishman & Tobin and Crimzon Rose, said “Through these transactions, LF USA acquires two of the best management teams in their respective markets, while both Fishman & Tobin and Crimzon Rose will strategically benefit from Li & Fung’s expanding global platform.”

Mark Fishman, chairman and ceo, and Jimmy Rosenfeld, president, will become co-presidents when the deal closes, Rosenfeld said.

Rosenfeld said the 97-year-old firm now has a partner that can help it take advantage of growth opportunities. It currently has licenses for Izod, Arrow, Nautica, Dockers, Calvin Klein boys tailored apparel and Tommy.

Crimzon Rose was founded by Felix Porcaro Jr., who will remain with the firm. In 2009, it merged with Erica Lyons Jewelry.

The jewelry business, other than the Erica Lyons brand, includes private label and licensed celebrity brands. Crimzon has the license for Daisy Fuentes jewelry sold at Kohl’s.

According to Lori Porcaro, director of marketing, the firm just signed a licensing agreement for jewelry under the Jennifer Lopez Collection.

Its costume jewelry lines are sold at major retailers such as Belk, Bon-Ton, Forever 21, Macy’s, ShopKo, Target and Wet Seal.