Li & Fung Profit Rises on U.S. Business Turnaround

By Kathy Chu 

HONG KONG--Sourcing company Li & Fung Ltd., a major middleman in the global apparel supply chain, said its 2013 net profit rose 17% thanks to a turnaround in its U.S. distribution business.

The Hong Kong company, which is a buying agent for retailers including Wal-Mart Stores Inc. and Target Corp., said Thursday its net profit rose to US$725.3 million from US$617.4 million a year earlier. Revenue rose 3% to US$20.75 billion from US$20.22 billion.

Li & Fung said the company generated more business in the latter half of 2013, as clients placed orders closer to the year-end holiday shopping season. The company has also been restructuring its ailing LF USA product design and marketing business.

Still, the company remains susceptible to the global economic weakness, as well as efforts by retailers to cut out middlemen and work directly with factories. In 2012, Wal-Mart canceled much of a deal in which Li & Fung would supply goods for the U.S.-based retailer's overseas stores.

Children's apparel companies Carter's Inc. and Gymboree Corp. have said they plan to obtain more of their products directly in coming years as well.

Li & Fung has been moving away from distributing products toward buying consumer-goods brands to boost its logistics and freight-forwarding businesses. Last year, the company acquired U.K.-based Lornamead Acquisitions Ltd., owner of Finesse shampoo, for around US$190 million.

The sourcing company also said Thursday it signed a deal to buy China Container Line Ltd., a sea-freight-forwarding company in mainland China. Li & Fung said it hopes the deal would help the company provide its logistics customers "with an end-to-end services offering."

Write to Kathy Chu at [e-mail]

Access Investor Kit for Li & Fung Ltd.

Visit http://www.companyspotlight.com/partner?cp_code=A591&isin=BMG5485F1692

Access Investor Kit for Carter's, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=A591&isin=US1462291097

Access Investor Kit for Li & Fung Ltd.

Visit http://www.companyspotlight.com/partner?cp_code=A591&isin=US5018971029

Access Investor Kit for Target Corp.

Visit http://www.companyspotlight.com/partner?cp_code=A591&isin=US87612E1064

Access Investor Kit for Wal-Mart Stores, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=A591&isin=US9311421039

Subscribe to WSJ: http://online.wsj.com?mod=djnwires