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Li & Fung first half 'skewed' by short order surge

Clothing supplier Li & Fung saw pre-tax profits edge up just 1% in the first half of 2013, with flat sales growth as a result of increased skewing towards the second half.

The multinational recorded turnover of $9.13bn (£5.89bn) for the six months to June 30, with core operating profit up 1% to $223m. However net profit after tax fell 3% to $111m.

The business, which is currently restructuring its US arm and has a new team in place, said performance had been “increasingly skewed towards the second half of the year”, as a result of growth in its wholesale and distribution business. Investment in growing the Asian part of the business had also affected the bottom line.

“The extent of this skewing effect is even greater this year, with customers requiring shorter lead times and less inventory, and therefore requesting shipments closer to the peak year-end retail season,” Li & Fung’s statement said. “We expect the proportion of sales and earnings recorded in the second half of the year to increase in future.”

As a result, despite a slow start, the management statement said the business was “on track to recovery in 2013,” following a “disappointing” 2012.

It is hoping to return overall performance to 2011 levels by the end of the year, ahead of its second three-year plan, which will kick off in 2014. This will involve the creation of three distinct “global networks” – trading; logistics and distribution – aimed at spurring further growth.

Of the US restructure, Li & Fung said: “While the US retail environment is tracking with the slow pace of economic recovery, it has remained challenging. LF USA has been able to largely protect its market presence and turnover, and is on target to complete its restructuring project by the end of this year.”

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