China’s Muji wannabe has long road to restoration

MINISO Holding

26/08/2022 14:44

(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    HONG KONG, Aug 26 (Reuters Breakingviews) - Chinese retailer
Miniso  9896.HK  faces a tough slog to rebuild itself. Shares of
the $2 billion company, which mimics the minimalist brand of
Japanese peer Muji, rallied 14% in New York on the back of
better-than-expected earnings https://ir.miniso.com/2022-08-25-MINISO-Group-Announces-June-Quarter-and-Full-Fiscal-Year-2022-Financial-Results.
 But they have yet to fully recover from a short-seller attack
and public backlash at home over its foreign self-styling.
    A combination of expanding abroad, selling more high-margin
goods and cost-cutting at home has paid off for boss Guofu Ye.
Despite a slight decline in sales, adjusted earnings jumped over
55% year-on-year in the three months to June, to roughly $33
million. 
    The results partially take the sting out of accusations made
last month by Blue Orca Capital, which alleges https://static1.squarespace.com/static/5a81b554be42d6b09e19fc09/t/62dfdb8997551a4588cb8618/1658837900330/Blue+Orca+Short+MINISO+Group+Holding+Limited+%28NYSE+MNSO%29.pdf
 the company was deliberately misleading investors about its
franchise business model, among other things. Miniso has refuted
those claims. Even after the latest rally, though, its New York
stock is still trading slightly below where it was before the
short-seller attack.
    At home, it is under a different assault. Chinese
nationalists have targeted Miniso for its Japanese-style,
prompting the company to apologise and vow to remove all
Japanese elements from their marketing and store designs by next
March.  urn:newsml:reuters.com:*:nL1N2ZV0IY The travails of Dolce & Gabanna https://www.breakingviews.com/considered-view/dolce-gabbanas-chinese-outfit-proves-reversible/?bved=false&bvshr=MTMzNzA5
 show how challenging it can be to win back patriotic shoppers.
Ye has his work cut out in restoring both investor and consumer
confidence. (By Thomas Shum and Robyn Mak)

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 (Editing by Una Galani and Katrina Hamlin)
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