(Yicai Global) July 29 — An insider at Missfresh said the cash-strapped Chinese fresh food e-retailer is not shutting down after dissolution rumors pushed the company’s stock to plunge nearly 43 percent.
The dissolution claims are false, a person related to Missfresh told Yicai Global yesterday. The dismissal of employees is part of business and organizational adjustments, the person added, noting that the firm is actively exploring all possible solutions to protect the staff’s rights and interests.
Beijing-based Missfresh announced in-situ dissolution after a meeting yesterday afternoon, according to a number of posts circulating on social media platforms yesterday. Employees did not receive severance or salaries, the comments also claimed. Affected by the rumors, the company’s US-listed shares [NYSE: MF] closed down 42.55 percent at 14 US cents yesterday.
Missfresh yesterday announced the cancelation of its fast delivery service, which allowed customers living within three kilometers of a front-load warehouse to receive their orders of fresh goods within 30 minutes. Users can still request overnight delivery services via the firm’s app, with the transportation provided by JD.Com’s logistics arm, Yicai Global learned.
Unlike conventional warehouses, which are usually in the city suburbs, Missfresh’s front-load warehouses, available in Beijing, Tianjin, and Shanghai, are located near residential communities, boosting delivery efficiency while ensuring goods’ freshness.
Missfresh logged a net loss of CNY973.7 million (USD144.4 million) in the third quarter of last year, widening 58 percent from the same period a year earlier. Net income soared 47.2 percent to CNY2.1 billion (USD311.3 million). Since then, the company has not released any quarterly earnings report.
The Tiger Global-backed startup announced on July 14 that it secured a CNY200 million (USD29.7 million) investment from Donghui Group and reached a strategic cooperation deal with the Chinese tourism conglomerate. However, a staffer claiming not to have received June and July salaries told Yicai Global that in yesterday’s meeting Missfresh said it still did not receive the CNY200 million an investor had earlier pledged and it has no spare cash now.
Issues affecting fresh food e-retailers are common to other kinds of startups in the internet field as well, Pan Helin, co-director at the research center for innovation in digital economy and finance under the International Business School of Zhejiang University, told Yicai Global. The startups will have to face risks of ruptured cash flow if they do not develop a certain ability to make profits and monetize services and products.
Editors: Xu Wei, Futura Costaglione
