Why the next 6 weeks will be crucial to Li & Fung

But there's no "cushion'' left.

According to Barclays, based on recent conversations with Li & Fung management, it seems there is no cushion left to forecasts. 

Even with US retail momentum slowing, management says it is still on track to achieving core operating profit guidance of a similar magnitude as 2011.

Here's more from Barclays:

However, it appears there is no cushion left, as orders thus far have tracked lower than expectations. The next six weeks will be crucial, in our view, particularly for the beleaguered LF US business.

We believe actual profits could fall slightly short of the revised target, and as such cut our FY13-14E EPS by 5-6%, and lower our core operating profit forecast for 2013 to US$840mn from US$882mn.

Rolling forward our valuation from an unchanged P/E of 20x the average of 2013E and 2014E EPS (from 2013E EPS) lowers our PT slightly by 2% to HK$12.2 from HK$12.5. Maintain EW.

No cause for alarm though; not as yet: Management believes that even if it misses targets, the miss will not be big.

That said, the distribution business is so significantly loaded toward November and December that we will not know how well the division has fared until year-end. Management hopes to provide another update in four weeks, but at this point, it says sales are on track, and if there is a miss, it would likely be small.