Paul Rosengard has resigned as president of men’s brands at LF USA and will join DDK and Boston Traders as partner and chief executive officer at the beginning of 2014.
This story first appeared in the December 5, 2013 issue of WWD. Subscribe Today.
Rosengard had been with Li & Fung since February 2010 and prior to that was group president of premium brands at Perry Ellis International for four years and executive vice president of Randa Accessories for 18 years.
DDK is a privately held Canadian company that owns the Boston Traders trademark and produces its men’s sportswear, Rosengard said Wednesday. “The goal is to build that business and license out other classifications,” he said. DDK also holds the license for Caribbean Joe men’s swimwear, the high-end outerwear brand Utex and also produces private label men’s and women’s apparel.
Rosengard will officially start in January but will be available to consult with Li & Fung until then, he said.
In other Li & Fung news, the company’s distribution business is beginning to weigh on its credit rating.
Moody’s Investors Service cut the sourcing giant’s rating to “Baa1” from “A3.” Despite the notch down, the company’s rating is still solidly investment grade, three steps away from “junk bond” status.
Lina Choi, vice president and senior credit analyst at Moody’s, pinned the company’s downgrade on “increased business risk from its distribution business, which we expect to have a slow recovery due to uncertainties in the global macroeconomic environment.”
The distribution business includes LF USA, LF Europe and LF Asia and serves principally as a wholesale distributor to major retailers, providing design, products and other services. For the first half ended June 30, the division saw core operating profits fall 53 percent to $5.5 million as sales remained flat at $2.93 billion.
“The distribution business, which has expanded significantly over the last three years and relies on growth of the private label and branded business, has incurred losses from one-time discontinuation of brands, sluggish consumption in the U.S., challenges associated with integrating acquired businesses and ramp-up issues,” Moody’s said. “While Li & Fung has taken significant steps to restructure its U.S. distribution platform over the course of 2013, including write-downs and a decelerated acquisition pace, Moody’s sees higher risk in this business model compared with the commission-based trading business.”
Weighing in Li & Fung’s favor is a strong liquidity position. The debt watchdog noted Li & Fung ended the first half with $419 million in cash, which was more than sufficient to cover its short-term debt of $142 million.