Li Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., is working on plenty of possible deals in the US, saying the worlds biggest economy is showing signs of improving.

We see a lot of opportunities in the US right now to buy things that weve always wanted, at prices that we feel are very reasonable, company president Bruce Rockowitz said in a Bloomberg TV interview late Tuesday. The whole US is in a bottoming-out phase thats going to last, probably till the end of this year, and then start to see a pickup into next year.

Li amp; Fung on Tuesday announced plans to raise HK$2.7 billion (US$348 million) selling new shares to fund purchases. Rockowitz is signing outsourcing deals and buying rivals, last month completing an agreement to supply Liz Claiborne Inc., whose brands include Kate Spade and Juicy Couture. Li amp; Fung made 62 percent of its HK$110.7 billion sales last year in the US.

Retailers are struggling financially and looking for cost- effective options including turning their sourcing functions over to Li amp; Fung, as in the case of Liz Claiborne and Talbots Inc., Renee Tai, senior vice president of research at CIMB-GK Securities (HK) Ltd., said in a note to clients today. She upgraded the stock to neutral from underperform.

Shares rise

Li amp; Fung rose 1.4 percent to close at HK$22.35, after dropping 8 percent Tuesday. The advance boosted the stocks gain this year to 68 percent compared with a 17 percent increase for the benchmark Hang Seng Index.

The company said it will sell shares at a price of HK$22.55 each, 6 percent lower than the May 4 closing price.

Li amp; Fung, which also supplies Inditex SAs Zara chain and Gap Inc., is eyeing acquisitions and some major outsourcing deals as prices of assets have fallen globally, Rockowitz said. The company also has plans for acquisitions in Asia, he added.

The agreement to acquire Liz Claibornes sourcing business may boost sales by $1 billion, the company has said.

Talks to become the primary supplier for Talbots, the US chain specializing in clothing for women aged 35 and older, may be completed within two months, according to the CEO.

Were going to gain a lot of market share in the current weak time, Rockowitz added.

Discounters and mid-tier retailers are showing the most improvement, while very high-end department stores are still struggling, Rockowitz said, declining to identify any retailing companies. He said the company supplies all the major retailers in the US.

Source: Bloomberg