Greece's stocks watchdog on Tuesday sued the management of Folli Follie, one of the country's few global retailers, amid concerns over the company's finances. The storm erupted in May when US-based equity fund Quintessential Capital Management reported that Folli Follie had seriously overestimated the number of its points of sale in investor reports, and was in poor financial health.
"We came across convincing evidence suggesting an unprofitable, rapidly shrinking business, with decreasing revenue and negative cash flows," QCM said. The fund claimed it had carried out an "extensive due diligence" and "found evidence" of fewer than 300 points of sale, compared to the 630 mentioned in company's 2016 annual report.
The report caused Folli Follie's share price to plummet and the company issued an angry retort, accusing QCM of distorting the facts and labelling them "speculators". But with the share price continuing to fall, the company was forced on May 25 to request a suspension of its shares on the Athens stock exchange. It also called for an independent audit of its financial statements.
Founded in 1982 in Athens, Folli Follie became one of Greece's most successful companies in a 35-year span. The company has expanded continuously, aggressively building a global presence and signing distribution deals with some of the biggest fashion and cosmetics brands in the world.
Follie Follie's biggest success came on the Asian market, and in 2011 it caught the eye of Fosun, one of China's top holding companies, which acquired a 9.5-percent stake to become a strategic investor. Fosun later bolstered its holdings to over 13 percent, and its stake grew to 15 percent last month amid a buying spree to shore up Folli Follie's tumbling stocks.
Comments
Comments are closed for this article.