By  on May 14, 2008

Sun Capital Securities Group LLC is shuttering Hong Kong-based sourcing operation Kellwood Trading Ltd. The vendor is in talks with Li & Fung Ltd. to consolidate and outsource its manufacturing.

"We are in discussions with Li & Fung to provide sourcing expertise for our Kellwood Global Asia organization," a Kellwood Co. spokeswoman said. "Kellwood Global Asia provides sourcing services to certain Kellwood divisions. It is anticipated that most of Kellwood Global Asia associates will join the Li & Fung organization."

Sources said Kellwood chief operating officer W. Lee Capps 3rd is in Asia meeting with Kellwood Trading's employees, and could potentially head the new sourcing operation. Sun, which acquired Kellwood for $762 million three months ago, saw potential in Kellwood to be profitable if the sourcing could be made more efficient, even if sales held flat.

Li & Fung boasts one of the most efficient sourcing models in the industry, and has gained a reputation as a low-cost operator that can make a profitable business from moderate brands on which other companies lost money.

Sun has been busy making changes since it took over Kellwood in February, including shutting underperforming brands like O Oscar, Liz Claiborne brand suits and dresses, and its moderate dress business. Additionally, although Sun has traditionally kept on the management of the companies it acquires, it has hired Russell Reynolds Associates Inc. to find a replacement for Kellwood chairman, chief executive officer and president Robert C. Skinner Jr., and has let go several top executives.

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