Li & Fung today announced that it has entered into a new agency agreement with Wal-Mart Stores, Inc. that supersedes the previous buying agency agreements signed in January 2010. The company also stated that the Option Agreement under which Wal-Mart could purchase all shares of Direct Sourcing Group Pte. Ltd. is terminated.
Under the new agency and related agreements, DSG will continue as the primary direct purchasing resource for Sam’s Club in the United States and to provide buying agency services to Walmart U.S. and certain Walmart International markets on a category-specific basis. Terms are similar to those under the previous buying agency agreements. The new agency agreement will continue for a period of five years with an extension option for an additional two years upon written mutual consent.
In addition to the new agency agreement, the group, through another of its subsidiaries, will trade with Walmart International markets on a principal to principal basis. The move to a supplier relationship will allow the group to provide Walmart International markets with design, replenishment and other services that it could not provide as a buying agent.
Li & Fung noted that Wal-Mart is now one of the group’s largest customers.