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Fashion Technology Startup Zilingo Suspends CEO

Fashion Technology Startup Zilingo Suspends CEO
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Fashion Technology Startup Zilingo Suspends CEO

Fashion Technology Startup Zilingo Suspends CEO

The board of Singapore-based fashion technology startup Zilingo said on Wednesday it had suspended its CEO and co-founder, Ankiti Bose, in a move that sources said was related to an investigation into the company's accounts.

A lawyer for Bose said that she declined to comment on her suspension or the investigation.

The company, which is backed by investors including Temasek Holdings and Sequoia Capital India, said in a statement that its shareholders and board members had received information last month that required investigation.

After this, the major investors authorized Zilingo's board to suspend Bose, pending an investigation of the "matters" raised, the company's statement said, Reuters reported.

"The major investors hired an independent firm to investigate the matter, and the company is working closely with the major investors and the independent firm for the investigation," Zilingo said, but declined to give specifics.

Sources familiar with the matter said Temasek and Sequoia had raised concerns about Zilingo's accounts to the company's board last month. The sources declined to be named due to the sensitivity of the matter.

Temasek declined to comment, while Sequoia referred to Zilingo's statement.

Zilingo was founded in 2015 by Bose and chief technology officer Dhruv Kapoor as a Southeast Asia focused e-commerce firm. The group has become a global supply chain enabler for the apparel industry, providing logistics, financing and other services to thousands of factories and merchants.

Bose co-founded Zilingo in her early twenties and scaled it up rapidly, styling herself as a role model for young entrepreneurs seeking to build a global business.

Zilingo, which says it has about 600 employees in eight countries, raised $226 million in early 2019 in its last fundraising round, which valued the company at about $1 billion.

It has said its sales volume is more than $1 billion annually.

According to publicly available records on Singapore's accounting regulator's website, Zilingo has not filed annual returns for 2020 and 2021 so far.

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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".