Global Chinese retailer MINISO has faced class-action lawsuits over federal securities concerns filed by US investors, including Robbins Geller Rudman & Dowd LLP and the Klein Law Firm. According to the official statement of The Klein, the law firm has filed a class action complaint on behalf of shareholders of MINISO Group, alleging that the company violated federal securities laws.
The lawsuit is on behalf of persons or entities who purchased or otherwise acquired publicly traded MINISO securities pursuant or traceable to the registration statement and related prospectus issued in connection with MINISO's October 2020 initial public offering.
The filed complaint alleges that MINISO Group made materially false or misleading statements or failed to disclose that defendants and other undisclosed related parties owned and controlled a much larger number of MINISO stores than previously stated.
According to the release, the law firm also said MINISO concealed its true costs where the company did not represent its true business model; the company and its chairman engaged in planned unusual and unclear transactions. Therefore the company is at risk of breaching contracts with People's Republic of China authorities.The statement also said the defendant's statements about the company's business, operations, and prospects were materially false and misleading or lacked a reasonable basis at all relevant times.
Meanwhile, Robbins Geller Rudman & Dowd LLP has also released a statement regarding the lawsuit, alleging that the IPO’s registration statement of MINISO was false and misleading. It concluded that MINISO is at risk of breaching contracts with PRC authorities and would imminently and drastically drop its franchise fees.
Previously in July, MINISO has claimed that the short seller report released by Blue Orca Capital recently was misleading, after the investment firm alleged that MINISO lied about its core business model.
According to MINISO's public announcement, the retailer said the company believes the report is without merit and contains misleading conclusions and interpretations regarding information relating to the company. The company’s board of directors, including the audit committee, is reviewing the allegations and considering the appropriate course of action to protect the interests of all shareholders.
The board has decided to form an independent committee, consisting of independent directors Xu Lili, Zhu Yonghua and Wang Yongping, to oversee an independent investigation regarding the allegations made in the report at the recommendation of the management of the company and in order to protect the interests of all shareholders. The independent committee may retain independent professional advisors to assist with the independent investigation when appropriate.
On the other hand, MINISO has dominated headlines recently as it apologised for presenting the company as a Japanese designer brand in an earlier marketing strategy. The brand said that it will complete the process of “de-japanising” its stores and renovation of decoration by March 2023. According to the official statement on its weibo account released on 18 August, MINISO said from 2015 to 2018, when the company was in the early stages of its globalisation, it recruited Japanese designer Miyake Junya as its chief designer, which then resulted in promoting itself as a ‘Japanese designer brand’.
The statement added that the company took a wrong direction in brand positioning and marketing in the early stage of development. As a result, the company has been de-japanising its stores since 2019 by removing any Japanese designer branding elements and upgrading the brand as lifestyle gathering store.
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