Global Brands chases higher margins
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Li & Fung spinoff Global Brands has reported stronger margins as it continues to shed non-performing brands in favour of higher end products.
The group’s total margin continues to rise, growing as a percentage to turnover from 29.7 per cent to 31.7 per cent in the first half of the current financial year.
Turnover of US$1.282 billion was down five per cent due to “the tail end of the discontinuation of underperforming businesses” and a weak euro. Excluding those factors, turnover actually grew by about six per cent.
CEO Bruce Rockowitz said as the company marked its first year as a standalone, listed business it continued to build on a solid foundation “as the partner of choice for American power brands in the affordable luxury space”.
“We have sharpened our organisational focus around our product categories, as we continue to improve our business mix towards higher margin areas while at the same time driving operational synergies across the organisation. Today, we have a strong portfolio of brands and an excellent platform to take them global through either licensing, ownership or brand management,” he said in a statement.
“the tail end of the discontinuation of underperforming businesses”
Global Brands’ business is always stronger in the second half of the year due to back-to-school sales and a higher concentration of holidays during this period, and the fact that some of the brands, such as Frye and Spyder, together with product categories like winter accessories, are more skewed towards the fall and winter seasons.
“We continue to invest in and strengthen our business,” said Dow Famulak, president and COO. “Within Licensed Brands, the characters and kids fashion areas continued to perform well. This strong performance comes as we leverage our unrivalled global platform and our position as one of the largest licensees of all major kids entertainment franchises.
“On the Controlled Brands side, we have added Jones New York to further strengthen our women’s fashion and apparel brands portfolio. We also continue to grow our key Controlled Brands, such as Frye, Spyder and Juicy Couture and have bolstered our management teams across several brands.”
Added Rockowitz added: “Consumer appetite for leading American affordable luxury brands remains strong, especially as consumers’ demand for these brands has been fuelled by the widespread access to the online arena that makes these brands more popular than ever globally. Looking ahead, we expect our leading businesses to continue to perform well and maintain the course of their growth trajectory. At the same time, we will continue to increase our geographic footprint and look for strategic opportunities to add to our existing platforms, through both licenses and acquisitions.”
Questions & Answers
Q.How much did Global Brands' turnover decrease by in the first half of the current financial year?
How much did Global Brands' turnover decrease by in the first half of the current financial year?
Turnover for Global Brands decreased by five per cent in the first half, reaching US$1.282 billion. This was primarily attributed to the discontinuation of underperforming businesses and a weak euro.
Q.What is the primary strategy Global Brands is using to improve its margins?
What is the primary strategy Global Brands is using to improve its margins?
Global Brands is improving its margins by shedding non-performing brands and focusing on higher-end products. They are also optimising their business mix towards higher margin areas and driving operational synergies across the organisation.
Q.Why does Global Brands typically see stronger business performance in the second half of the year?
Why does Global Brands typically see stronger business performance in the second half of the year?
Business performance is stronger in the second half due to back-to-school sales and more holidays. Also, certain brands like Frye and Spyder, and products such as winter accessories, are more geared towards autumn and winter seasons.
Q.Which new brand has Global Brands added to strengthen its women's fashion portfolio?
Which new brand has Global Brands added to strengthen its women's fashion portfolio?
Global Brands has added Jones New York to bolster its portfolio of women's fashion and apparel brands. This acquisition aims to strengthen the 'Controlled Brands' side of the business.
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