Supply chain giant Li & Fung today (13 August) said profit rose 18% to HKD$1.24bn (US$159m) for the first half of the year, and announced the acquisition of a US handbag importer.

For the first six months ended 30 June 2008, the group's turnover was HKD$47.4bn, 25% higher than the same period last year.

The Hong Kong-based company also said it is buying Van Zeeland, a New York-based importer of mid-tier and department store handbag brands including its flagship labels Kathy Van Zeeland Handbags, B Makowsky and Tignanello, for US$330m.

Van Zeeland's brands are available in more than 1,300 retail locations including Macy's and JC Penney.

A statement said: "This acquisition will significantly strengthen the group's presence in the fashion accessories market and will establish Li & Fung as the leading handbag supplier in the US across all retail distribution channels.

"Kathy Van Zeeland and Bruce Makowsky will remain co-presidents of the Van Zeeland businesses."

William Fung, group managing director of Li & Fung said: "We are very pleased to report strong growth in the first half of this year.

"The macroeconomic conditions were challenging but we were successful in gaining market share during this period.

"At the same time, we have been very successful in further diversifying geographically with our share of European business growing from 23% to 30% in the first half.

"This strong growth is driven by our significant increase in business with the Arcandor Group and Tommy Hilfiger's European business."

So far this year Li & Fung has taken control of the buying function for Toys"R"Us, Sanrio, Timberland and Kellwood.

The group said it has increased its presence in the better priced fashion label arena by acquiring the Silvereed Group in February 2008 and Wilson & Wong Trading Company Limited in July 2008.

Both are based in Hong Kong and are "virtual manufacturers" with a focus on design and product development of ladies' fashion garments.

"These deals will add a new portfolio of fashion customers for us," the company said.

Fung added: "This is the first year of the Group's 2008-2010 three-year plan."

He said that despite a backdrop of uncertain global economic conditions, the group has progressed towards its two main targets - for turnover of US$20bn and a core operating profit target of US$1bn by 2010.