Wal-Mart supplier Li & Fung, responding to reports that Wal-Mart is cutting orders it places with suppliers, says it hasn't seen reduction in orders from retail giant

, September 27, 2013 () – Li & Fung Ltd., the world’s largest supplier of clothes and toys to retailers, said U.S. orders are solid and it hasn’t seen reductions from Wal-Mart Stores Inc. “There hasn’t been any cutbacks from Wal-Mart orders,” Bruce Rockowitz, chief executive officer of the Hong Kong-based company, said today. “When you look across the orders that come from the United States, they are very solid for Wal-Mart.”

Wal-Mart is cutting orders it places with suppliers this quarter and next to address rising inventory, according to a Sept. 17 e-mail from the company to a supplier. Li & Fung, whose customers also include Target Corp. and Kohl’s Corp., reported first-half profit last month that missed analyst estimates amid sluggish demand from U.S. retail customers.

Li & Fung’s orders from Wal-Mart are at more than 90 percent of the company’s capacity for the year, Rockowitz said in an interview. The Bentonville, Arkansas-based retailer is also placing orders for 2014 as normal, Li & Fung said in an e- mailed statement yesterday.

“We are pretty much right on track on what we’ve been targeting for this year to get back to our 2011 level,” Rockowitz said. The second half of the year has also improved from the first half, the executive said.

The company dropped 0.5 percent to HK$11.38 as of 10:44 a.m. in Hong Kong trading today after yesterday’s 3.1 percent loss. The stock has dropped 17 percent this year, compared with a 2.2 percent gain for the benchmark Hang Seng index.

Christmas Orders

Orders for the Christmas season this year have improved over last year and 2011, Rockowitz said. No “big gains” are expected for the holiday, he said.

U.S. holiday-season sales are projected to rise 2.4 percent this year, the smallest gain since 2009, according to ShopperTrak, a Chicago-based firm.

Wal-Mart in August cut its annual profit forecast after shoppers’ reluctance to buy more than necessities hurt second- quarter sales. U.S. shoppers have been coping with elevated unemployment, higher taxes and rising gas costs.

Retail customers have all adopted a “more cautious view toward their winter sales this year,” Li & Fung said in August.

U.S. consumers have focused spending on home products, while tablets for children are “solid,” Rockowitz said today. Apparel is one “anemic” area, he said, as “there is not that much exciting fashion going on for now.”

Li & Fung, which traces its beginning to 1906 when parent Li & Fung Group was founded, supplies U.S., European and Asian retailers with toys, clothes and furniture.

The company’s net income fell 16 percent to $96 million for the six months ended June from a year earlier, excluding a writeback in the year-earlier period.

--Editors: Stephanie Wong, Dave McCombs

To contact the reporters on this story: Susan Li in Hong Kong at sli31@bloomberg.net; Anjali Cordeiro in Hong Kong at acordeiro2@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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