Baozun, Inc. (BZUN) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between March 6, 2019 and November 20, 2019, in March 2019, Baozun, Inc. (BZUN) touted its increase of its brand partners from 152 to 185 and stated that the Company was “confident in strategy and the effectiveness of operations, and expect Gross Merchandise Volume (“GMV”) to grow by 40% to 50% year-over-year and total revenues to increase to over RMB7.2 billion.” Regarding its brand partners, Baozun stated it selects brand partners in product categories that the Company believes will “optimize revenue mix and improve profitability.” Then, in August 2019, Baozun revealed it was “restructuring” its relationship with an unnamed “electronics” brand partner, later revealed as Huawei, in an effort to ” brand portfolio toward high quality GMV,” which it expected would grow by “40% to 45% year-over-year.” What Baozun failed to disclose, however, was that this restructuring was actually a result of Huawei moving its online merchandizing in-house, and by November 2019, Baozun had stopped servicing Huawei. Consequently, on November 21, 2019, Baozun released 3Q19 results and 2019 and 2020 financial prospects that fell short of expectations. On this news, the price of Baozun ADRs declined by $7.60, or 17.5% to close at $35.90.