Li&Fung will be dropped from Hong Kong’s Han Seng index of leading quoted businesses from March 6, the index compilers announced on February 12.
In our view, the UK government’s Modern Slavery Act has profound implications for virtually all major garment buyers, sellers and manufacturers – however small their UK sales are.
Li & Fung have acquired UK garment supplier May Trading, which went into administration after a major case of embezzlement at its Dhaka factory AMCS.
Li & Fung visit does not overcome growing security fears over Kenya’s “800,000 new jobs” garment ambitions
Though it became sub-Saharan Africa’s largest garment provider to the West in 2013, Kenya’s belief an export-focussed garment industry can create 80,000 new jobs now appear threatened by an upsurge in terrorism – though Li&Fung are now investigating further sourcing from the country.
L&F efforts used to split: clients 90, factories 10. “Now it is closer to 60-40 or 70-30.”
Li & Fung announced the launch of a Vendor Support Services business unit on January 6, as it continues to diversify its revenue from buyer-paid commissions on procurement and improve relations with its buyer clients.
Business claims it’s due to flawed US diversification project. But its purported insights into Western markets are hopelessly out of line with what current trading data’s showing
Though practically no buyers have publicly admitted reducing orders in Bangladesh, it is generally assumed many will.
According to Bloomberg, Li& Fung makes twice as much on a pair of jeans made in Bangladesh and sold in Asda as Walmart does. Walmart’s comments to Li & Fung on this claim are unrecorded.
If you think the way stock markets do, Li and Fung (L&F) is currently an awful company to get involved with. If you think the way garment buyers do, recent events at L&F might make you think a bit harder about increasing you business with them or reviewing alternatives– but for most of us, most of the time, they’re still the best third-party sourcing operation in the world.
Li & Fung (L&F) shares lost half their value between March 2012 and February 2013, making the company the worst performer on the Hang Seng Index after a collapse in shareholder confidence following a profit warning, poor sales at major client Walmart and the loss of some Walmart, Carters and Fifth & Pacific business.
After hitting just over $HK 20 per share n spring 2012, the company’s stock hit $HK 10 during February 18, after a leaked Walmart email added to worries L&F had caused the market over the previous few months.
On February 8, Fifth and Pacific (F&P) announced through a US regulatory filing the end of its US warehousing and distribution agreement with Li & Fung (L&F) as from January 31. Though L&F later clarified that its contract to source for the retailer was unaffected, the announcement hit L&F shares – already weakened by earlier bad news.
Fifth and Pacific said it appointed Ridge Global, a third-party distribution centre operations nd labour management company on February 5, 2013, to provide distribution operations ervices at F&P’s West Chester, Ohio facility. The operator had agreed to employ the 150 people at the facility. What F&P called “the incremental costs of transitioning to this rrangement” were included in F&P’s recently announced financial outlook for 2013.
Li & Fung is in advanced talks to buy Synergies Worldwide, a sourcing agent whose operations include original designs for Inditex, Reuters reported on October 4.