Store closures, bankruptcies dent Li & Fung earnings
Record store closures and customer bankruptcies around the world have taken their toll on Hong Kong-headquartered Li & Fung, the supply-chain solutions specialist for retailers and brands.
Releasing its annual results yesterday, the company said its core operating profit on continuing operations fell 20 per cent to US$285 million. Turnover decreased by 6.2 per cent to US$12.7 billion, mainly due to customers’ ongoing destocking, customer turnover and bankruptcies.
And the company took a $114 million hit from the divestment of three product verticals during the year, contributing to the adjusted profit attributable to shareholders decreasing by 15.9 per cent to $117 million.
“Last year was a demanding year and we’ve made a fundamental reorganisation of our business in line with our three-year plan to build the supply chain of the future,” said CEO Spencer Fung.
“We initiated a structural change with a new management team to focus on our core customers and operational excellence. This includes a new group president, a new COO and an entirely new chief digital officer position. We have the right strategy, and now the right structure and people in place.
The company said the ongoing US-China trade war had a minimal impact on Li & Fung’s business due to the company’s diversified sourcing network outside of China.