It’s tough times for the middleman as e-commerce increasingly connects producers with consumers, and that fact played its part in the nearly 50 percent plunge in Li & Fung’s profits last year.
The Hong Kong-based sourcing company announced its annual results and outlined its new Three-Year Plan Wednesday, and things were worse than analysts projected.
Profit attributable to shareholders for the full year 2016 was down 47 percent to $223 million from $421 million, marking Li & Fung’s third year of declining profit. Turnover fell 11 percent to $16.8 billion owed at least in part to reductions in order volume, deflation and currency weaknesses against the U.S. dollar.
“This has been one of the toughest trading environments Li & Fung has ever seen,” Group CEO Spencer Fung said, escalating his comments from 2015, a year he called “challenging.” “Macroeconomic conditions weakened, the retail environment worsened, input prices deflated two years in a row, and retailers continued to destock; all impacting our results for the three years ended 2016.”
Adding to that, Group chairman William Fung said, “I have never encountered a more challenging backdrop to our business. While geopolitical and economic realities are in flux, this uncertain environment also presents opportunities for Li & Fung.”
Some of those opportunities are part of the company’s plan to create the “Supply Chain of the Future.”
In its Three-Year Plan through 2019, which focuses on transforming the businesses to accommodate a “fast-changing environment,” Li & Fung said it will focus on speed, innovation and digitalization.
The first step will be to reorganize the company into two major divisions: services (supply chain solutions and logistics solutions) and products (three product verticals and onshore wholesale businesses). Each division will have its own strategic focus and management team.
“Our ability to operate with agility is a key part of our strategy and becomes even more important as we transform the way we do business and drive growth,” Spencer Fung said. “Openly collaborating in new ways of working and developing new value-added services is a key part of our innovation strategy. Creating end-to-end digital supply chains will bring data-driven insight for our partners, help us make faster decisions and create better solutions for our customers.”
Retail giant Amazon rolls out a new way for shoppers to get instant gratification from their online orders and tangles with Trump over state sales taxes.Read more
Now that NAFTA negotiations have officially started, it looks like the trade deal may come far from the one we've known for the last 23 years.Read more
The seven variables that allow apparel businesses to balance performance and vulnerabilities by effectively identifying, assessing, mitigating and managing their supply chains.Read more
Consumers are starting to reward Target for its work to transform its product, customer experience and fulfillment offerings.Read more
Consumer interest in brick and mortar shopping seems to be picking up, or at least declining at a slower rate, according to the most recent store foot traffic data released by analytics firm Retail Next. It may be a glimmer of hope for physical retailers amid the……...Read more
Under Armour's CEO is leaving Trump's manufacturing council, plus Twisted X launched footwear made from recycled plastic bottles.Read more
Coach, Inc. identifies the ways it which it will strengthen the Kate Spade brand by undertaking some of the steps used to turn its namesake business around.Read more