Chinese low-cost retailer Miniso responded on July 27 to allegations made in a recent report by short selling institution Blue Orca Capital. The company said it believes that the report is groundless and contains misleading interpretations and conclusions.
On July 25, Blue Orca Capital disclosed its short position on Miniso, describing it as a declining brand whose revenue had slumped 40% from its pre-IPO peak, and expressing doubts about its financial report. It also said that instead of operating a network of independent franchisees, hundreds of Miniso stores are secretly owned and operated by its executives or individuals closely related to the firm’s chairman.
Affected by the report, the US share price of Miniso plummeted 14.98% on July 26. The company’s Board of Directors, including the audit committee, is now reviewing the allegations, Miniso said. The board decided to set up an independent committee composed of independent directors Xu Lili, Zhu Yonghua and Wang Yongping to oversee an investigation into relevant allegations made in the report.
Founded in 2013, Miniso achieved a dual primary listing on the main board of the Hong Kong Stock Exchange on July 13 at an opening price of HK$13.20 ($1.68), below the issue price of HK$13.80 ($1.76). From the opening of its first store in Guangzhou in 2013 to December 31, 2021, Miniso has grown to operate over 5,000 stores across the world, of which more than 3,100 stores are in China – covering more than 330 cities – and about 1,900 stores are overseas – covering about 100 countries and regions.
However, financial report data show that the losses of Miniso in fiscal year 2019-2021 were 290 million yuan ($42.86 million), 260 million yuan ($38.42 million) and 1.43 billion yuan ($211.3 million) respectively, with a cumulative loss of nearly 2 billion yuan ($295.57 million) in three years.