Global Brands turns corner with third quarter profit of US$113m
Li & Fung spin-off posts US$113m profit in third quarter, sending shares 3.75pc higher
Global Brands Group, the consumer brands business that spun off from Li & Fung in July, turned the corner in the third quarter to post a profit of US$113 million, following a half-yearly loss due to heavy seasonality of the business and one-off listing expenses.
Shares of the firm rose immediately after the announcement yesterday morning to a high of HK$1.70 before closing up 3.75 per cent at HK$1.66. In comparison, the benchmark Hang Seng Index fell 0.10 per cent.
The company said yesterday that profit for the first nine months amounted to US$50 million as strong earnings in the third quarter offset the US$63 million loss in the first half.
"This is in line with previous announcements that seasonality skews significantly towards the second half of the year," company chairman William Fung Kwok-lun said.
Fall and winter apparel are typically more expensive and thus result in higher margins for fashion-related businesses. Global Brands holds the licences for Disney characters and lifestyle brands such as Juicy Couture, Frye, Jennifer Lopez, Sean John, mostly focusing on the American "masstige" sector - the space between prestige and mass-market brands.
The business was also affected by one-off expenses of US$31 million associated with the listing in the first half.
Turnover for the third quarter stood at US$1.03 billion while turnover for the nine-month period amounted to US$2.38 billion.
The business expects to generate 60 per cent of its top line from the second half as it adds new brands.
Global Brands is rumoured to be in talks with former soccer star David Beckham for a casual wear line. Beckham, one of the world's most bankable former athletes, has lent his image to everything from fragrances to underwear, and has his own licence-branding company, Beckham Brand.
Global Brands chief executive Bruce Rockowitz, was photographed on November 10 with the former England captain at the firm's Lai Chi Kok offices.
