etail giant Kate Spade delivers blow to sourcing giant Li & Fung
2015/5/12 16:16:26 Push：
KATE Spade & Company (KS), a major US retail giant, which designs and markets accessories and apparel with annual revenues of US$1.1 billion, has delivered a heavy blow to Hong Kong sourcing giant Li & Fung (L&F).
"We recently amended our agreement with Li & Fung," said KS president and chief operations officer George Carrara.
"With the exception of quality inspections, this brings all sourcing functions for accessories in-house, beginning with spring 2016, he told a conference call to discuss first quarter results last week.
It is estimated that L&F generates $300 million in annual sales from Kate Spade, making it one of Li & Fung's leading customers.
"In Greater China, we closed the joint venture transactions and the transition to our new joint venture partner, Walton Brown, is progressing nicely," said Mr Carrara, adding that sourcing ready-to-wear would remain with Li & Fung.
Said KS chief executive Craig Leavitt: "We also opened our fourth flagship at the end of April in Causeway Bay, located in a heavily trafficked area with both young locals and tourists from PRC."
Said UBS analyst Spencer Leung: "A combination of service deterioration and loss of key relationship managers/experienced merchandisers might have contributed to an accelerated trend of key accounts establishing their own direct sourcing capability.
"As customers of larger scale consider different sourcing options, we highlight that it is critical for L&F to refocus on smaller accounts, a segment that was largely neglected in the past," the analyst said.
Li & Fung posted a 12 per cent fall in year-on-year net profit to $539 million in 2014, drawn on revenues of $19.2 billion, which increased 1.4 per cent.
"In spite of tough headwinds, our core customers in our trading business grew and our logistics business continued to have high growth," said group CEO Spencer Fung at the time.
"We fully expect that the investments we have made will position the company for growth in the short, medium and long term," he said.
"We recently amended our agreement with Li & Fung," said KS president and chief operations officer George Carrara.
"With the exception of quality inspections, this brings all sourcing functions for accessories in-house, beginning with spring 2016, he told a conference call to discuss first quarter results last week.
It is estimated that L&F generates $300 million in annual sales from Kate Spade, making it one of Li & Fung's leading customers.
"In Greater China, we closed the joint venture transactions and the transition to our new joint venture partner, Walton Brown, is progressing nicely," said Mr Carrara, adding that sourcing ready-to-wear would remain with Li & Fung.
Said KS chief executive Craig Leavitt: "We also opened our fourth flagship at the end of April in Causeway Bay, located in a heavily trafficked area with both young locals and tourists from PRC."
Said UBS analyst Spencer Leung: "A combination of service deterioration and loss of key relationship managers/experienced merchandisers might have contributed to an accelerated trend of key accounts establishing their own direct sourcing capability.
"As customers of larger scale consider different sourcing options, we highlight that it is critical for L&F to refocus on smaller accounts, a segment that was largely neglected in the past," the analyst said.
Li & Fung posted a 12 per cent fall in year-on-year net profit to $539 million in 2014, drawn on revenues of $19.2 billion, which increased 1.4 per cent.
"In spite of tough headwinds, our core customers in our trading business grew and our logistics business continued to have high growth," said group CEO Spencer Fung at the time.
"We fully expect that the investments we have made will position the company for growth in the short, medium and long term," he said.
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