Weakness in Li & Fung’s U.S. division and its distribution business led Standard & Poor’s to cut the sourcing giant’s credit rating one notch to “BBB-plus” — a still solid investment-grade ranking.

“Li & Fung faced greater challenges while executing its expansion strategy than it had expected, especially amid a weak global economy in the past two years,” S&P said.

LF USA is being reworked under the leadership of president Dow Peter Famulak, who took the reins from Rick Darling late last year.

“The performance of LF USA is likely to remain weak in 2013,” S&P said. “However, growth at the company’s Europe and Asia operations, fueled by acquisitions, will likely offset the soft performance of LF USA.”

Li & Fung’s credit rating has a stable outlook, which S&P said reflects its believe that the company “will lower the pace of acquisitions, restore its profitability and focus on turning around its distribution business.”