Li & Fung profits were down 69% in the first half of 2013, through June 30th. The company blamed the change on $198 million in extraordinary gains booked in H2, 2012. Core operating profit for the sourcing firm was up 1 percent to $223 million.
The news came on solid comp data and flat sales of $9.13 billion.
Bruce Rockowitz, president and CEO of the company, expressed optimism about the restructuring of the company’s U.S. division under former LF Europe president Dow Famulak. He said the changes are “progressing well,” and will be finished by the end of 2013.
In keeping with LF tradition, the company blamed the poor numbers on economic uncertainty in Europe. Continual weakness in consumer spending and depressed sentiment has reduced orders from the continent.
However, Rockwitz said, “Despite the prevailing macroeconomic conditions, our core sourcing business remains solid and continues to gain market share.”
Margin improved to 15.1% as a share of turnover, from 14.5% in 2012.
The company had a disappointing 2012, as it struggled with its three-year acquisitions strategy and restructuring. The goal for the end of 2013 is to return financial perform to 2011 levels to prepare for the next three-year plan.
Business has been shifting to the second half of the year due to increased wholesale sourcing and distribution, along with the seasonal effects of back to school and the holidays. The earnings results report states that “the skewing effect is even greater this year, with customers requiring shorter lead times and less inventory, and therefore requesting shipments closer to the peak year-end retail season.”
Softgoods turnover was down 5% compared to H1 2012, largely due to the skewing effect mentioned above and continued uncertainty in Europe. Hardgoods, particularly home products, grew by 7%, both from organic growth and acquisitions. Home products were a particularly strong area.