Hong Kong-based Li & Fung, the world's biggest textile sourcing group, has posted a 38% hike in first half profit and says it is to spend more than $243m on buying two suppliers to help it take advantage of the global trend toward outsourcing.

The company, which has made no secret of the fact that it hopes to reach target sales of $10bn next year, is buying Marks & Spencer's largest shoe supplier, UK-based Peter Black International Limited, for GBP48.14m (US$95.5m).

It is also spending $148m on Regatta USA LLC, which designs and supplies proprietary
brands and private label products under the Daisy Fuentes, Simply Vera by Vera Wang and Nicole Miller names for major retailers including Kohl's, Wal-Mart, JC Penney and Charming Shoppes.

Mr William Fung, group managing director of Li & Fung, said the new purchases support the continuing trend by retailers in the US and Europe to outsource.

The acquisition of PB Group, which posted a pre-tax profit of GBP9.3m for the year to 31 January 2007 on sales of GBP189m, will also shore up Li & Fung's position as a supplier to some of Britain's biggest high-street names, including Next, Tesco and Sainsbury's. It will also bring new skills in product design and development in both the footwear and beauty businesses.

Bruce Rockowitz, president of Li & Fung (Trading) Limited, added that the deal "will provide a unique platform and infrastructure for the future development of our European onshore business," as well as doubling its Health, Beauty and Cosmetics business
overnight.

The Regatta buy is important because it will expand the company's proprietary brand business. For the year ended 31 December 2006, Regatta had a pre-tax profit of US$27.9m on sales of US$299m.

"Regatta has become the "go to" destination for people seeking to license their name, and for retailers seeking proprietary brands," Rockowitz explained.

"It will help further expand our in-house brand management and marketing capabilities to enhance existing and future proprietary brands and private label product offerings."

Li & Fung, which is one of Asia's fastest-growing large companies, also unveiled a 38% jump in first-half  profit to HK$1,051m, helped by organic growth and recent acquisitions including the Oxford Womenswear Group, the Rosetti handbag business, and the sourcing operations of KarstadtQuelle and Tommy Hilfiger..

Turnover rose 35% to HK$37,772m (US$4,842m - the Group's strongest first half turnover growth since 2000 - and core operating profit increased by 41% to HK$1,179m.

There's no doubt that Li & Fung is benefiting from consolidation among major retailers and an increasing number of private equity investments in the sector - both of which lead companies to look for new efficiencies in their businesses and outsource non-core operations.

It is also growing organically through the strong trend towards private label, while the addition of new suppliers and sourcing operations enhances its ability to attract new customers.