February 2009
Hong Kong-based global consumer goods exporter Li & Fung Limited and Liz Claiborne Inc. have agreed to enter into a long-term, exclusive Buying Agency Agreement whereby Li & Fung will act as the primary global apparel and accessories sourcing agent for all brands in the Liz Claiborne Inc. portfolio, including Lucky Brand, Juicy Couture, Kate Spade, and Isaac Mizrahi designed Liz Claiborne New York with the exception of the jewelry product lines.
Li & Fung will continue as the sourcing agent for Mexx as previously announced and will be Mexx's exclusive sourcing agent going forward. Completion of the arrangements is expected to take place in the first quarter. Liz Claiborne Inc. will pay going forward an agency commission of its product purchases through Li & Fung.
CEO Liz Claiborne, William McComb said that the company is making changes to meet consumer demands since managing large and complex sourcing strategies and teams throughout Asia from its office in the US is no longer feasible to meet those demands.
Given this reality, Liz Claiborne has to reconsider its core competencies and build separate and unique sourcing plans based on specific requirements to execute effective brand-centric strategy.
"With Li & Fung as a partner, our brands will have access to a vast, worldwide network of manufacturing partners and best-in-class systems, management and talent–all of which give us more flexibility and a better competitive position,” said McComb.
“Greater buying power will enhance our going in margins, and disciplined execution will improve our speed-to-market. Bottom line, this is the optimal way to address the issues with our current sourcing infrastructure and a significant strategic opportunity that will enable us to deliver high quality, irresistible product to our consumers and retailers around the world."
Li & Fung President, Bruce Rockowitz expressed excitement at the partnership citing last year’s Mexx outsourcing deal as a proven value of the company to a supply chain of products and services.
“In this case, not only are we confident that Li & Fung will contribute to more efficient sourcing through our global sourcing network of over 80 offices in over 40 economies, we are also equally confident that Li & Fung's dedicated teams of sourcing professionals which comprise a wide spectrum of expertise will help address the specific needs of each brand, and enable us to deliver quality and attractive products to further strengthen the positioning of these brands,” said Rockowitz.
"This is a very strategic outsourcing deal for Li & Fung. Our overall sourcing platform in the brands business will be further enhanced as this deal brings in a number of prestigious brands like Kate Spade, Juicy Couture and Lucky Brand. This is one of the best portfolios of high profile brands in the world, and a great addition to Li & Fung's existing customer base. In addition, the deal helps us to continue to gain market share and contribute to our bottom line in a very difficult market. Undoubtedly, we expect it will attract more outsourcing deals to Li & Fung in the future."
Pursuant to the arrangement, Li & Fung will take over the sourcing operations of Liz Claiborneand pay to Liz Claiborne an amount equal to US$75 million on completion and an amount not exceeding US$8 million to be payable within 14 days after completion.
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