Jeweller Folli Follie becomes latest victim of coronavirus, protests, shuts all shops and lets go of 60 employees in Hong Kong

Greek jeweller Folli Follie has shut all shops and let go of 60 employees in Hong Kong.

The jewellery and watch retail chain operator will exit the city, making it the latest victim of the coronavirus pandemic and the city’s anti-government protests. Deloitte Advisory has been appointed as the liquidator of FF Group, which owns Folli Follie, for its business in Asia including Hong Kong, mainland China, Japan and Australia.

“All of [FF Group’s] 12 stores in Hong Kong will be closed today. The closure will affect 60 employees,” Derek Lai Kar-yan, vice-chairman of Deloitte China, said. He attributed the closure to Hong Kong’s deteriorating economic climate over the past six months. “We have seen more retailers file for liquidation recently,” he said. “We will handle Hong Kong first. For stores in other areas, we will see if there are any buyers.”

Links of London, the other brand under FF Group, said it will close until further notice starting Monday, June 8, on the website of Moko Mall in Mong Kok. Folli Follie has five stores in Hong Kong, while Links has seven.

Folli Follie was founded by Dimitris Koutsolioutsos and his wife in 1982, who currently own a 35 per cent stake in the company, according to Refinitiv data. Chinese conglomerate Fosun International, owned by billionaire Guo Guangchang, acquired 9.5 per cent stake in FF Group in 2011 and is its second-largest shareholder currently, holding about 16.4 per cent.

The company, founded in 1982 in Athens, was undergoing a €300 million (US$338 million) debt restructuring and avoided bankruptcy in February, before the coronavirus pandemic broke.

Koutsolioutsos, its chairman and founder, resigned in 2018 after a hedge-fund investor raised an alarm over the accuracy of Folli Follie’s financial statements. In particular, an investigation by consultant Alvarez & Marsal found that the group’s Asia revenues were about 90 per cent lower than originally reported. Koutsolioutsos remains its largest shareholder and is being sued as one of those responsible for the discrepancies in its 2017 financial statements.

Folli Follie’s former chief executive, George Koutsolioutsos, Dimitris’s son, was forced to resign as a non-executive member of the company’s board in December.

At its peak, Folli Follie operated outlets in 17 markets across Asia-Pacific and the Middle East, with as many as 185 locations in mainland China and 20 in Hong Kong.

The city’s retail sector has been on its knees since last year, starting with the protests. Retail sales plunged by 36 per cent year on year in April this year, shrinking for a 15th consecutive month despite a slight improvement from the 42.1 per cent year on year contraction in March.

Since luxury brand Prada decided last year not to renew its lease in Hong Kong, businesses such as Louis Vuitton and Swatch Group, which owns the high-end Blancpain, Omega and Tissot watch brands, have also pulled back from the scene amid declining tourist traffic. As few as 4,100 visitors arrived in Hong Kong in April, compared with 5.57 million in the same month a year earlier, according to data by the city’s Tourism Board.

Harvey Nichols owner Dickson Concepts warns of long, gloomy days ahead for Hong Kong’s retail industry

Meanwhile, jewellery maker Chow Sang Sang said its net profit plummeted by 36 per cent for the year ended March 31, 2019, while TSL, another jeweller, said it expected to report an HK$80 million loss for the same period, reversing a profit of HK$54 million for the year before.

Dickson Concepts, which licenses upmarket fashion brands such as Tod’s and Roger Vivier, as well as jewellery brand Chopard in Asia, and owns department store Harvey Nichols, said on Monday these were “the most challenging market conditions” it has ever faced.