Li & Fung Shares Slide on Arcandor Insolvency Filing
Li & Fung Ltd., which supplies retailers worldwide, declined in Hong Kong trading after client Arcandor AG, a German department-store operator, filed for insolvency, Bloomberg reported. Arcandor contributes about 5 percent, or $700 million, of Li & Fung’s sales, Managing Director William Fung said today. The Hong Kong company that’s the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp. said today it’s owed $5.4 million by Arcandor. Li & Fung, seeking to cut reliance on the U.S., bought the purchasing unit of Arcandor, formerly KarstadtQuelle AG, in 2006 for HK$594 million ($77 million). Sales in the U.S. made up 62 percent of Li & Fung’s HK$110.7 billion ($14.3 billion) revenue last year, compared with 72 percent in 2006. Read more.
In a related story, Dow Jones reported that Deutsche Post AG's employees could be hurt by Arcandor AG's insolvency filing given that about 4,000 workers at the German postal giant work on Arcandor assignments, analysts said Wednesday. In an unlikely worst-case scenario, Deutsche Post's staff who handle orders for the retail and tourism company would be surplus to requirements. This would cause one-off losses of several hundred million euros for the former monopolist, Equinet analyst Jochen Rothenbacher said in a research note. Read more. (Subscription required.)