Global Brands revels in maiden result
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Global Brands, the listed Li & Fung spinoff, has reported its first trading result – reveling in a 37 per cent profit rise.
The Hong Kong based company listed as an independent business on July 9, a move CEO and vice chairman Bruce Rockowitz says afforded it the freedom to fully build its brands business and pursue its own distinct and focused strategy. That strategy includes a direct-to-consumer business,, which would not have been possible under the Li & Fung business model. “At the same time, we continue to enjoy the benefit of being a member of the Fung Group.”
Group sales in the second half totalled US$2.105 billion, up 7.5 per cent on the same period the previous year, while profit rose 36.6 per cent to $217 million.
Merging the half years under the two ownerships into one set of figures, annual sales reached $3.454 billion and profit $154 million .
Rockowitz says the business will continue to primarily concentrate on ‘American power brands’ through Licensed Brands and Controlled Brands divisions.
“On the Licensed Brands side, we continue to sharpen the focus of our platform in terms of both the product categories that we offer and the brands that we work with, while expanding the platform globally.
“One notable achievement of our efforts is that today we are among the largest licensed brand companies within the kids sector, a success that is based upon our leadership position in characters as well as in kids fashion. We have a truly global platform in the kids area, and we are working hard to further strengthen our prominent position in key categories and geographies worldwide.
“In the US, notable achievements include the master licensing agreement that we signed with Disney in the sleepwear category in August. In Europe, our focus has been to integrate our businesses across major markets to strengthen our leadership across the region. In China, we have successfully established a strong platform for the kids fashion and character businesses.”
Global Brands is also building its licensed brands portfolio , securing deals with major American brands in footwear and accessories: a new global accessory licensing relationship was signed with Cole Haan last year, and in January 2015, with Kate Spade.
“In addition, we renewed our global footwear license agreement with Coach. These are all highly successful affordable luxury brands with strong growth momentum,” said Rockowitz.
The company exited its private label jewellery business post listing and consolidated its home and women’s apparel offers to ensure each is run more efficiently.
“Merging the half years under the two ownerships into one set of figures, annual sales reached $3.454 billion and profit $154 million .”
On the Controlled Brands side, the company made special mention of Frye, an American brand with a strong heritage.
“Our Frye retail stores delivered strong results, while sales through our eCommerce portal Frye.com also recorded significant growth. Looking ahead, we see the further expansion of our retail footprint, growing online sales and extending our product offering as being the key drivers to building Frye into a global lifestyle brand. We have also made a number of key hires to accelerate growth.”
Spyder has established itself as “a high end, high performance” skiwear brand in the US and Europe.
“We are working to expand its presence in other geographies as well as in other product categories. In particular, we believe this is an opportune time to make a big push for Korea (the host country for the winter Olympics in 2018) and China. We believe the brand’s edgy aesthetics and high performance will resonate well in these key Asian markets.”
Juicy Couture has started with very strong sales momentum and retail partners are actively working on a plan for new store openings globally.
Aquatalia, though much smaller in scale than Frye, has proven its brand appeal, and expanded into menswear with a Fall 2015 collection.
In December, Global Brands announced a joint venture with David Beckham and his business partner Simon Fuller. The joint venture, Seven Global, focuses on the continued development of the brand around David Beckham as well as on creating large scale brands in partnership with a select number of high‐profile sports and entertainment icons. The venture will cover all major consumer product categories.
“We are extremely excited about the prospects that lie ahead for Seven Global,” said Rockowitz. “With our strong global platform of TLC, one of the world’s leading brand management companies that we acquired in January 2014, we are confident we can establish Seven Global as a trendsetting enterprise in the sports and entertainment space.”
Rockowitz said although the macroeconomic environment remains complex, the company expect its margins will continue to trend upwards due to its growth in scale, improvement in gross margins and an improving business mix in favor of higher‐margin businesses, and an ongoing focus on integrating its businesses and rationalising the cost structure, while exiting unprofitable and non‐core businesses.
“As we continue to grow and strengthen our business, one strategic priority is to extend our global reach. We have established a leading platform in our space in the US, which will remain our largest geography for the foreseeable future, and we believe we can successfully replicate this in Europe and Asia.”
Questions & Answers
Q.What was the main reason Global Brands spun off from Li & Fung?
What was the main reason Global Brands spun off from Li & Fung?
The CEO stated that becoming an independent business allowed them the freedom to fully build their brands and pursue a distinct, focused strategy, including direct-to-consumer operations which weren't possible before.
Q.How did the company's financial performance look in its first reporting period?
How did the company's financial performance look in its first reporting period?
Global Brands reported a 37 per cent profit rise in its maiden result. Group sales in the second half totalled US$2.105 billion, up 7.5 per cent, while profit rose 36.6 per cent to $217 million.
Q.Which specific areas are being targeted for growth in the kids' sector?
Which specific areas are being targeted for growth in the kids' sector?
The company is strengthening its position in the kids' sector globally, with notable achievements including a master licensing agreement with Disney for sleepwear in the US and establishing a platform in China for kids fashion and character businesses.
Q.What is the strategic purpose of the joint venture with David Beckham?
What is the strategic purpose of the joint venture with David Beckham?
The Seven Global joint venture focuses on developing the David Beckham brand and creating large-scale brands with other high-profile sports and entertainment icons, covering all major consumer product categories globally.
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