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KarstadtQuelle sells purchasing arm to Li & Fung
22 May '06
3 min read
Europe's leading retail group KarstadtQuelle AG (Essen) and Li & Fung Ltd, one of the world's largest companies which is headquartered in Hong Kong, have concluded a cooperation agreement.
Li & Fung will handle all global import for the Karstadt, Quelle, neckermann.de and specialty mail order brands as a procurement service provider. The goal is to expand the import volume in the future to over €2 billion a year. This will also be achieved by transferring volumes previously handled by import companies in Germany directly to factories in Asia.
"The cooperation with Li & Fung is a further key component in the Group's reorganization. This step is at least as important for the development of our Company as the sale of our Karstadt compact department stores last year. With this, we are entering a new phase of our restructuring with the goal of significantly improving our operating performance," stated the CEO Thomas Middelhoff in Berlin on Saturday.
The Group is forecasting significant savings effects as a result of its cooperation with Li & Fung, a reduction of purchase prices of up to 10 percent, greater flexibility in procurement processes as well as a considerable extension of terms of payment (payment conditions).
"Among other things, we are thus anticipating a reduction of working capital by around €500 million. This is a dramatic improvement," said Middelhoff.
By 2008, KarstadtQuelle intends to settle 80 percent of its import volume in Asia. The partnership with Li & Fung will make it possible for the Group to offer its customers up to twelve collections a year in future. This means that the company will be able to react more flexibly than before to fast-changing customer behavior. In order to achieve this, KarstadtQuelle, Germany's largest textiles retailer, will develop design centers in Europe and Asia in the coming months. These will set the specifications for collections throughout all segments.
Li & Fung will handle all global import for the Karstadt, Quelle, neckermann.de and specialty mail order brands as a procurement service provider. The goal is to expand the import volume in the future to over €2 billion a year. This will also be achieved by transferring volumes previously handled by import companies in Germany directly to factories in Asia.
"The cooperation with Li & Fung is a further key component in the Group's reorganization. This step is at least as important for the development of our Company as the sale of our Karstadt compact department stores last year. With this, we are entering a new phase of our restructuring with the goal of significantly improving our operating performance," stated the CEO Thomas Middelhoff in Berlin on Saturday.
The Group is forecasting significant savings effects as a result of its cooperation with Li & Fung, a reduction of purchase prices of up to 10 percent, greater flexibility in procurement processes as well as a considerable extension of terms of payment (payment conditions).
"Among other things, we are thus anticipating a reduction of working capital by around €500 million. This is a dramatic improvement," said Middelhoff.
By 2008, KarstadtQuelle intends to settle 80 percent of its import volume in Asia. The partnership with Li & Fung will make it possible for the Group to offer its customers up to twelve collections a year in future. This means that the company will be able to react more flexibly than before to fast-changing customer behavior. In order to achieve this, KarstadtQuelle, Germany's largest textiles retailer, will develop design centers in Europe and Asia in the coming months. These will set the specifications for collections throughout all segments.
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