(Yicai Global) Sept. 15 -- US shareholders of Miniso have filed a class action lawsuit against the Chinese budget retailer for allegedly violating federal securities laws.

The Klein Law Firm filed the suit on behalf of investors in Miniso, claiming that the firm made false and misleading statements, concealed its true costs, did not represent its true business model, engaged in planned unusual and unclear transactions resulting, potentially breaching contracts with Chinese authorities, and did not disclose that it would imminently and drastically drop its franchise fees, the US law firm said in a statement dated Sept. 13.

Guangzhou-based Miniso declined to comment on the matter for the time being, The Paper reported yesterday.

Miniso's Hong Kong-listed stock [HKG: 9896] closed 3.6 percent higher at HKD10.98 (USD1.40) today. In New York, it shares [NYSE: MNSO] ended up 0.6 percent at USD5.53 yesterday, down more than 76 percent from the closing price on its maiden trading day in October 2020.

The first class action lawsuit against the lifestyle retailer dates back to July 26, when US short-seller Blue Orca released a report on the firm. Since last month, Jakubowitz Law, Levi & Korsinsky, and Kessler Topaz Meltzer & Check have filed class action suits on behalf of investors in Miniso.

Blue Orca, which has broad experience with Chinese firms, believed Miniso’s claim of operating an asset-light, high-margin network of more than 5,000 independent franchise stores was a lie, pointing out that hundreds of outlets were secretly owned and operated by executives or individuals closely connected with the company’s chairman.

Blue Orca’s report also said Miniso was a declining brand with revenue down 40 percent from the pre-listing peak, extensive store closures before the Covid-19 pandemic, and franchise fees down as much as 63 percent in the previous two years.

Editor: Futura Costaglione