Li & Fung to lay off 40 staff in Hong Kong
Li & Fung has confirmed it will lay off 40 employees in its Hong Kong headquarters even though its chief executive said a few weeks ago that it would not sack anyone in the near future.
The trading company, which sources garments, shoes, make-up items and electrical appliances from low-cost regions in Asia and supplies them to Walmart stores in the United States and other retailers in Europe, said the staff members were made redundant as a result of the 'changing needs of its European business'.
The company declined to say whether there would be more lay-offs, amid rumours that up to 170 employees will be made redundant by the end of this year.
On June 22, a team of nine newly appointed Li & Fung presidents told some 50 analysts that the company's priority in the coming three years was pursuing growth through acquisitions and cost reduction.
At the time, chief executive Bruce Rockowitz said the group had no plans to cut jobs and would 'minimise the pain of staff' in any restructuring of business units. He had told the South China Morning Post the same thing a few days earlier.
Analysts believe Li & Fung's costs will rise in these three years, during which the company aims to double its core operating profit to US$1.5 billion a year and build three core business units - trading, distribution and logistics.
Li & Fung shares dropped HK 54 cents, or 3.78 per cent, to HK$13.72 yesterday.