Li & Fung’s $1.1b divestment simplifies business

The sale of three underperforming and volatile businesses could relieve a drag on the earnings of the listed entity.

Supply chain manager Li Fung said on Thursday it has agreed to sell three product vertical businesses, namely furniture, sweaters and beauty, for $1.1 billion in cash.

The earnings of these three businesses are relatively volatile and have been underperforming the rest of the group, so the sale should remove a drag on the earnings and performance of the listed entity. 

The move is also in line with a broader simplification of the trading house which helps US retailers from Wal-Mart, Kohl's to Target to source their products. As chief executive Spencer Fung takes over the reins of the group from his father and honorary chairman...

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