Li & Fung reports falling profits

Li & Fung (0494.HK), which handles apparel supply chains for major US retailers, reported on Thursday that net profit fell 15% in the first half of the year as labor costs and commodity prices soared, the Wall Street Journal reported. The company said it expects uncertainty in its key US and European markets, where it sources products for retailers such as Wal-Mart Stores (WMT.NYSE), Abercrombie & Fitch (ANF.NYSE) and Kohl’s (KSS.NYSE), to continue for several years. Li & Fung said revenue rose 33% to US$8.8 billion in the first half, with the US and Europe accounting for 80% of that total. Li & Fung’s stock has been hit hard this year by the sluggish global economy, rising operating costs, and concerns that embattled retailers will turn to cheaper channels to source their products; its share price has plunged 47% since the beginning of the year, compared to a 15% decline in the benchmark index.