Profits at Li & Fung, one of the world’s largest sourcing companies, halved in the first six months of this year as its global retail clients struggled in what it called “one of the toughest trading periods we have ever seen.”
The Hong Kong-listed group sources clothes, toys, beauty supplies and other goods for many of the world’s biggest retailers, from Walmart in the US to Britain’s Marks & Spencer, and its poor results can be read as another sign of the stresses facing retailers amid a sluggish global economy, writes Jennifer Hughes.
The company reported net profits of $72m compared with $164m in the same period last year. While that beat expectations of $68m, the company’s 6 per cent drop in revenue to $8.1bn undershot forecasts of $8.5bn.
Spencer Fung, chief executive, said:
Retailers are extremely challenged right now. They are grappling with the impact of e-commerce, a pervasive promotional environment and high levels of inventory. This translated to a lower order volume for our business during the first six months of the year.