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.
With all three elements in place we have built the right foundation for the future. I am confident that we are on the right track,” said Fung.
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.