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Li & Fung Global Brands Spinoff Begins Trading

Li & Fung’s spun off consumer brands and licensing business, Global Brands Group, began trading in Hong Kong Wednesday.

Global Brands, which operates licensed brands like Coach, Michael Kors, and Under Armour, opened trading at HKD $2.09 and closed at a lower HKD $1.80, according to Bloomberg. Based on the closing price, the company has a market value of HK$15 billion ($1.9 billion). Li & Fung shares dipped 2.3% to close at HKD $10.10.

Li & Fung announced its intent to spin off its Global Brands Group in March as part of an ambitious three-year expansion plan. The company said the move will allow Li & Fung to channel its efforts to sourcing and logistics, while Global Brands will be able to focus on fashion-forward design capabilities, brand development, licensing and marketing. As a result of the split, Li & Fung said each business will be able to grow more quickly and have further financial flexibility.

Now Global Brands CEO, Bruce Rockowitz said in a Bloomberg Television interview in Hong Kong Wednesday, “We’re really focused on ‘below luxury’, that’s sort of affordable luxury, and it’s new to this part of the world.” He added, “We have some incredible brands that are at the beginning growth stages that we’re taking to the U.S., Asia and Europe.”

Rockowitz resigned from his post as Li & Fung president and CEO last week to assume his role as leader of the new unit. Spencer Fung, previously an executive director with the company replaced Rockowitz as group CEO.

Global Brands Group posted net sales of $3.3 billion in 2013, with the majority of that revenue coming from the U.S. market. Li & Fung released its 2013 annual report in March showing a 70 percent core operating profit increase to $871 million, and a 21 percent net profit increase to $755 million. The spin off is expected to be a cash generator for the company.

Rockowitz said of the separation in May, “All of us at Li & Fung see great opportunity to develop this business further through a growth strategy that will include further building out the portfolio of licensed brands, adding new categories to the current brand portfolio, and increasing the geographic and channel footprint. We believe that allowing Global Brands Group to focus on this strategy as a standalone business will be the best way forward.”

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