An employee works behind the counter inside a Folli Follie SA store in Athens, Greece. (Photographer: Kostas Tsironis/Bloomberg)

Folli Follie Says Asia Sales Grew Even as China Branches Shrink

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(Bloomberg) -- Folli Follie’s network of stores in its key Chinese market shrank by more than half last year even as its sales in Asia increased, according to the latest figures published by its parent company FF Group this week.

The main brand of the Greek retailer reported 113 points of sale in mainland China in a document published on Monday and reviewed by Bloomberg News, against a network of over 240 points of sale declared in its 2016 annual report. On Thursday, the company said that its Asia-Pacific revenue rose to 928 million euros ($1.1 billion) in 2017, which corresponds to 65 percent of the total sales for the entire company.

Mantalena Kasidiaropoulou, head of investor relations for FF Group in Athens, said she is working to provide “more qualitative information” to the market about its store network, together with a more detailed list of points of sale as soon as possible. She was not in a position to comment on Bloomberg’s review of the company’s reports. “We are a retail company and there’s a constant shift in points of sale,” she said.

Declaring higher Asian sales from a rapidly shrinking Chinese network comes as the company falls under scrutiny from investors and regulators, after a report by the hedge fund Quintessential Capital Management questioned its financial accounting. China accounted for more than one third of Folli Follie’s outlets worldwide, according to its 2016 financial statement.

The QCM report, refuted by the company, triggered a 51 percent decline in FF Group’s share price, with 376 million euros of bonds quoted as low as 55 percent of face value on Tuesday, according to data compiled by Bloomberg. Shares and bonds partially recovered later this week after the company announced a buyback plan and Fosun International Ltd., the company’s second largest shareholder after founder Dimitris Koutsolioutsos, increased its stake to 15 percent.

In the statement on Thursday, the company said wholesale represented the vast majority of revenue. Wholesale includes also revenues that are not included in points of sale, such as corporate gifts, online marketplaces, and airline in-flight sales, it said.

Shrinking Network

On Monday, the company said that Folli Follie’s points of sale worldwide dropped to 587 in 2017 from 634 a year earlier and published a “detailed list of all the points of sales related to the brand Folli Follie.” It invited “everyone to visit them.”

The list includes 113 points of sale in mainland China and another 57 between Taiwan, Hong Kong, and Macao, according to the Bloomberg News review. The list also includes one point of sale at "Shanghai Hongqiao Airport Terminal 3". The airport doesn’t have a terminal 3.

At least 10 points of sale identified in the U.K. and Ireland have also stopped selling jewelry, watches or accessories of the Greek brand in the past months or years, according to phone calls made by Bloomberg News this week.

The list also included points of sale designated simply as “(blank),” and “online,” and 63 non identified "Duty Free" shops. Kasidiaropoulou said she wasn’t in a position to comment over U.K. and Irish points of sales and other items on the list published on Monday.

FF Group asked EY to carry out an independent audit of its financial statements, as requested by Greece’s financial markets regulator.

©2018 Bloomberg L.P.

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