(Yicai Global) Aug 1 -- Prada has asked a Shanghai court to freeze more than CNY11 million (USD1.63 million) of assets held in the name of Chinese online luxury retailer Secoo because of a contract dispute, according to a court document.
Shanghai-based Secoo has contractual disputes with a number of companies, not just the Italian luxury brand, and has been saddled with more than 1,000 customer complaints, according to publicly available information.
An arbitration document published by the Shanghai Jiading District People’s Court on July 5 showed that Secoo-related assets have been frozen for one year, according to corporate information platform Tianyancha.
Public information suggests that Secoo has contract disputes, including sales and loan issues, with numerous companies such as Shanghai Longemont Department Store and Shenyang Commercial City Department Store. Yicai Global also previously reported that the firm had defaulted on payments to suppliers.
Buyers have lodged a swathe of complaints against Secoo. In the last 30 days alone there have been more than 1,000 complaints about Secoo on Black Cat, an internet users complaint platform. Many said Secoo included ‘system upgrade’ and ‘refund review’ among its excuses for not shipping or refunding goods. The earliest complaint was lodged eight months ago.
Secoo had a net loss of CNY566 million (USD83.8 million) last year, a 547 percent increase on 2020. The company’s poor earnings performance is reflected in its stock price [NASDAQ: SECO], which closed at 26 US cents yesterday, down more than 80 percent from a year ago.
Secoo’s predicament has to do with operational issues, according to Pan Helin, a researcher at the International Business School of Zhejiang University. Secoo positions itself as an e-commerce platform for luxury goods, but has a limited range, while the number of channels from which shoppers can buy such goods is expanding, he said.
Secoo also lacks price advantages compared with duty-free stores, Pan said. And due to the pandemic, the international supply chains for many categories of goods are blocked, and the firm did not pay enough attention to local luxury brands, he added.
According to Tianyancha, Secoo filed for bankruptcy reorganization on Jan. 5, and a total of 153 million shares in the company were frozen.
Editors: Shi Yi, Peter Thomas