Supply chain giant Li & Fung Limited reported sales grew 26 percent in 2011 as it brought on a slew of acquisitions to bolster its global sourcing capabilities for western retailers and began tapping Asia's growing demand for consumer goods.
During 2011, the Group signed 18 deals that included 12 acquisitions for the Group’s Trading Network and six for its Distribution Network that added approximately $2 billion in sales and $211 million in core operating profit.
The Hong Kong company reported sales reached $20.0 billion compared to $15.9 billion in 2010. Gross profit reached $2.99 billion, or 14.9 percent of sales, up 130 basis points from 2010. Selling and distribution expenses reached 4.2 percent, merchandizing expenses were 6.2 percent and administrative expenses 0.5 percent of sales. Core operating profit reached $882 million, or 4.40 percent of sales, down 16 basis points from 2010. Cash earnings climbed 25 percent to $850 million, while profits attributable to shareholders increased 24 percent to $681 million, or $8.43 per share.
Sales of Softgoods, which consist largely of apparel sales to U.S and European retailers, rose 17.1 percent to $12.9 billion and now account for 64 percent of sales. Sales in the United States, where the company sells to Wal-Mart Stores Inc., Abercrombie & Fitch Co. and Kohl's Corp, increased 15.8 percent to $12.0 billion. Sales to Europe rose 11 percent to $4.28 billion. The biggest gains, however, came from Rest of Asia, where sales increased more than 4.5 times to $1.22 billion, reflecting the acquisition of Integrated Distribution Services Group Limited (IDS). The surge in Asian sales reduced the U.S. share of Li & Fung's revenue to 60 from 65 percent and Europe's share to 21 from 24 percent compared to 2010.
“Asia has become an important growth platform for Li & Fung’s businesses and sourcing activities, as brands and retailers around the world are increasingly focusing on the region,” the company said in earnings release.
