Li & Fung reported net profit attributable to shareholders rose 17 percent in 2013, to $725 million, aided by a turnaround in its U.S. business. Sales grew 3 percent to $20.7 billion. The Hong-Kong sourcing giant also proposed a spin off of its global brands and licensing segment.

Core operating profit climbed 70 percent to $871 million and net profit increased 21 percent to $755  million. The sourcing agent, which works with retailers including Wal-Mart, Target and Kohl’s, said its solid performance was driven by the positive performance in the Distribution Network, following the turnaround of LF USA, as well as continued growth momentum in the Logistics Network. Moreover, the Trading Network achieved solid results.

Li & Fung has grown quickly through acquisitions in recent years, but has struggled to turn around its U.S. distribution business, which holds its brands and licensing operations. In the past year, the company has discontinued brands, cut costs and installed new management.

“We created many positive changes at LF USA which have put that part of the business back on track and we drove improvement in the Group's overall margins and profitability even while continuing to invest in select strategic areas,” said Chief Executive Bruce Rockowitz.

Li & Fund also announced a new three-year plan designed to accelerate organic growth across all areas of the business and leverage the Group's multi-channel sourcing platform across its Trading Network.

“Over the past three years we have navigated through an uncertain macroeconomic environment and changing global landscape,” said Rockowitz. “Important ‘mega trends' have been emerging, such as a rapidly-changing retail environment which relies increasingly on multi-channel sourcing, the movement of production out of China to lower cost countries, and the need to manage risks associated with sourcing in less mature production markets.”

Core strategies in the new three-year plan include:
•    As part of its core sourcing platform, the Vendor Support Services unit (VSS) unit will seek to improve operational efficiencies in the Group's global vendor base enabling the company to better serve customers and strengthen their global supply chain;
•    China Container Line (CCL), one of the largest sea freight forwarding companies in China, has been acquired, enabling Li & Fung to further expand its freight forwarding capabilities globally and improve end-to-end logistics services;
•    Its Distribution Network will be reorganized, aligning its private label businesses which rely more on sourcing skills with the Trading Network;
•    Its Global Brands Group (GBG), comprised of its brands and licensing businesses, will become a stand-alone business. An application for a possible spin-off and separate listing of its GBG is being made on the Hong Kong Stock Exchange.
 
If the spin off goes ahead, Rockowitz plans to take over Global Brands Group, and the current COO Spencer Fung would become the fourth generation from the Fung family to run the company. Fung is the eldest son of Li & Fung co-founder Victor Fung. Analysts have complained that the century-old company, founded by two brothers, has become too complex for them to understand.

“We see a great opportunity to distinguish and further develop our global brands business with the reorganization,” said Rockowitz.