Blog: Busy week for Li & Fung
Leonie Barrie | 17 November 2008
It’s been a busy week for Hong Kong based sourcing giant Li & Fung. On the one hand the firm, which sources everything from clothing and footwear to toys, is to clamp down on hiring and expenses and may even make some of its staff redundant as “worsening economic conditions” hit its clients, which include some of the world’s biggest retailers.
On the other, though, it has negotiated a new sourcing deal with women's wear maker Liz Claiborne for the struggling Mexx Europe brand, and its private investment arm Fung Capital Europe has bought Savile Row fashion house Hardy Amies for an undisclosed sum.
The arrangement with Mexx will see the brand’s buying offices in Hong Kong, Bangalore, Shanghai and Shenzhen integrated into Li & Fung's operations. Over at Hardy Amies, which went into administration last month after failing to raise funds, plans are thought to include building the brand’s presence in international markets.
Despite trying to shake up Mexx, Liz Claiborne remains under pressure. Costs related to brands it has sold, discontinued and licensed under a strategic review have pushed the firm to a third quarter loss of US$69m, from a profit of $33m in the same quarter last year. The company, whose brands include Kate Spade, Juicy Couture, Lucky Brand and Mexx, saw sales fell 15.9% to $1.015bn, but said its streamlining activities are benefiting the business.
While Li & Fung’s interest has been in Hardy Amies, fashion tycoon Sir Philip Green is thought to be considering a takeover bid for men’s wear retailer Moss Bros after spending GBP6.7m (US$10.2m) on a 28% stake in the company. Green bought the shares from Iceland's Kaupthing Bank, which held them on behalf of Icelandic investment company Baugur, and said he was considering his options for the rest of the company.
Buyers are also being sought for British luxury brand group Marchpole Holdings, which has gone into receivership less than a month after securing GBP2.5m in extra funding. The company, which posted a loss of GBP5.4m (US$8.3m) in the year to 5 April 2008, recently signed a licensing deal for the DKNY menswear label and owns or has the license for brands such as Emmanuel Ungaro and Jean-Charles de Castelbajac.
Meanwhile, fears over the negative impact that fluctuating currency exchange rates could have on its international business have led Wal-Mart Stores Inc to cut its full-year earnings guidance – even though it achieved solid third quarter sales and earnings growth. The retailer said its international units witnessed the greatest quarterly gains, and said it is optimistic about the upcoming holidays.
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