By I. Zafolia
[email protected]
Reports of massive discrepancies in Folli Follie Group's 2017 results, including a difference of 290 million USD in cash reserves for its China operations along with "gap" of one billion USD in turnover from all Asian operations, has cast significant suspicion on previous years' results by the beleaguered Greece-based retailer and accessory maker.
Preliminary conclusions from audits by Greece's capital market commission on 2016's results are already being scrutinized, with previous years to follow.
No less than three investigations into FF's financial results are underway, one by the capital market commission, forensic evaluations by Alvarez & Marsal and a probe by prosecutors in Athens.
Greece's capital market commission has already suspended the trading of FF's share on the Athens Stock Exchange and levied fines for manipulation of traded shares, all coming in the wake of a highly negative report by Quintessential Capital Management (QCM) on the company early last May.
QCM pointed to six main points in basing its results, namely, what it claims a significantly smaller number of sales points; major storefronts cited on the company's website that have actually closed (FF Soho, FF Madison Avenue); a smaller presence on the Internet and social media, especially relative to competitors in Asia; financial results showing increased cash infusions into Asian subsidiaries; only two Chinese subsidiaries (Fu Li Fu Lei and Binlianyun), with total revenues of 40 million USD and 50 sales points when FF refers to one billion USD in revenues for all of Asia; and finally, replacement of the Baker Tilly consulting and auditing firm with a relatively unknown company, Ecovis.
