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Aug 19, 2009
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Li & Fung eyes more market share, beauty firms

By
Reuters
Published
Aug 19, 2009

HONG KONG, Aug 19 (Reuters) - Leading global consumer goods exporter Li & Fung (0494.HK) expects to grow by increasing market share in the U.S. and Europe and with cosmetic company acquisitions there and in Asia, the firm's chief said on Wednesday 19 August.



"In relation to Li & Fung sales ... in the long term our growth is not coming from macro, our growth is coming from gaining market share," President and Executive Director Bruce Rockowitz told Reuters in an interview. He said the company expected the market share gains to come in the United States and Europe.

Rockowitz said the company expected an improvement in Christmas orders after last year's dismal season but there would not be "robust" growth.

"I would say it doesn't seem bad in the environment, and doesn't seem overly bullish .... I don't see a real robust Christmas," he said, adding the U.S. economy has started to recover.

Rockowitz said that Li & Fung wanted to enter the beauty and health business, and was looking to buy cosmetic firms in the U.S., Europe and Asia. He declined to give further details.

The company, whose customers include U.S. retail giants Wal-Mart (WMT.N: Quote, Profile, Research) and Target (TGT.N: Quote, Profile, Research), is relying on acquisitions and new outsourcing deals to meet its targets. It said last week that it expected big acquisitions later this year or early next year.

Li & Fung said in June that the insolvency of one of its major clients, German retailer Arcandor (AROG.DE: Quote, Profile, Research), would impact the company's three-year plan to boost sales [nHKG187021].

Last week, Li & Fung posted 12.9 percent growth in its first-half net profit against 18 percent growth a year earlier. It said profit would improve in the second half amid signs of an improving global economy and reaffirm its three-year targets.

Rockowitz said he expected Temasek [TEM.UL] to keep its stake in company beyond September.

Last September, Li & Fung a 4.62 percent to Temasek to raise funds for acquisitions and Temasek was not to sell the shares for a period of 12 months.

"They did this deal for a long term, not for one year. I would be surprised if they change," he said.

Shares of Li & Fung surged 56.6 percent in first half period, outperforming a 27.7 percent rise in the broader market .HSI. The stock closed Wednesday 19 August down 6.15 percent at HK$26.70.

(US$1=HK$7.75)

(By Fion Li and Donny Kwok. Editing by Karen Foster)

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