Hong Kong-based exporter Li & Fung is looking to seal a sourcing agreement with Myer, the Australian department store firm, according to a source cited by Dow Jones.

The source said the deal - expected to be signed by the end of the year - equates to yearly sales of about US$100m and could rise in value in future.

Li & Fung will reportedly source both soft and hard goods to be sold in Myer.

Dow Jones also cited a CLSA research note saying Myer is likely to outsource all of its private-label sourcing to Li & Fung, which it already has a contract with.

Myer was taken over in March by a private-equity led consortium which now wants to reduce the company's costs and increase profitability.

The chain, which is saddled with high costs and low sales, has struggled to compete against market rival David Jones.

Li & Fung recently acquired retailer KarstadtQuelle's entire global sourcing business after reporting a 24% leap in first-half profit.