Li & Fung Limited will spin off its $3.2 billion brand management business, which acquired long-term global licensing rights to the Spyder brand in 2013, to its shareholders July 7 following a vote Tuesday by its board of directors.
The Guangzhou, China-based sourcing and logistics giant expects shares of its Global Brands Group (the Group) to begin trading on the Hong Kong Stock Exchange July 9. Li & Fung Ltd President and CEO Bruce Rockowitz is scheduled to resign July 7 to take on the CEO role full-time at Global Brands Group, which owns rights to more than 360 brands and manages another 100.
Li & Fung announced plans to separate the two businesses in March, saying it would unlock shareholder value, provide more financing flexibility and eliminate the risk of conflicts of interest with its core logistics and sourcing customers in the retailing industry. Going forward, the Group will simply become another customer of Li & Fung’s logistics, sourcing and private label services.
Li & Fung established the Group in 2005 to broaden its relationships with retailers seeking exclusive merchandise. The Group develops branded products under various licenses for sale to retailers such as Nordstrom, Macy’s, Kohl’s and J.C. Penney, mass merchants such as Wal-Mart and Target, off-price retailers, independent chains, specialty retailers and independent e-tailers such as amazon.com and zappos.com.
The Group’s Licensed Brands segment owns and manages more than 350 active brand licenses, while its Controlled Brands segment has de facto control of 10 brands under long-term global licensing contracts. In 2013, Licensed Brands generated $2.68 billion, or 81 percent, of the company’s revenue, while Controlled Brands accounted for the remaining $608.0 million, or 19 percent. One of Rockowitz’s key growth strategies is to grow sales of Controlled Brands by launching online stores and ramping up digital marketing of the Frye and Spyder brands.
Global Brands Group generated EBITDA of $295.8 million on sales of $3.3 billion in 2013, with 85 percent of revenue coming from the United States. Though headquartered in Hong Kong, the business provides finance, order process management and other support services from a global operational center in Greensboro, NC. Its U.S. headquarters is located in New York City.
