Beauty Products Retailer Jumei Ends Ugly Wall Street Run

The company's revenues have declined since 2015 amid heightened competition in the market.

Anna Vodopyanova
    Apr 16, 2020 11:00 AM  PT
Beauty Products Retailer Jumei Ends Ugly Wall Street Run
author: Anna Vodopyanova   

After nearly six years on the market, Jumei International Holding Ltd. cut ties with Wall Street investors this week at a time when Chinese companies are increasingly turning to domestic exchanges.

According to the statement posted Monday evening, Jumei has agreed on a merger with an entity of Super ROI Global Holding Ltd., owned by the founder, chairman, and chief executive of Jumei, Leo Chen.

Chen bought all outstanding shares in Jumei at $20 per American depositary share as per a plan proposed in January. The company accepted the offer in late February, sending its stock to skyrocket 25% at the time.

A few years back, Jumei has turned down a February 2016 bid from Chen and co-founder Yusen Dai to take the company private at $7 per ADS – an offer that represented 27% upside from Jumei's trading price at the time. But the stock wasn't trading at that level when the company lifted off.

This Beijing-based beauty and fashion retailer has traded as "JMEI" on the New York Stock Exchange since May 2014. The company raised $245.1 million in IPO by selling 11.1 million American depositary shares at $22 apiece. At the current ADS ratio, that's $228 per share.

In the six years since its listing, Jumei carried out share repurchase plans, ADS ratio changes, and a change in financial advisor and public accounting firm. In 2016, the company lost its two co-chief financial officers, Mona Meng Gao and Yunsheng Zheng, who resigned for "personal reasons."

From 2014 to 2015, Jumei's revenues nearly doubled to 7.3 billion yuan. Since then, however, the company saw an annual revenue decline in the competitive online retail market dominated by giants Alibaba Group (NYSE: BABA), JD.com (Nasdaq: JD), and Pinduoduo (Nasdaq: PDD). From 2015 to 2016, Jumei's revenues declined 14%, then 6% in 2017, then 26% in 2018. Between 2014 and 2018, net income dropped from 405 million yuan to 117 million yuan, according to the company's filings.

At its latest ADS ratio, JMEI enjoyed its highest trading level in the year it listed, at near $380 per share. After a dip to $130 in early 2015 and a rise to the level of $250 in May 2015, Jumei's stock declined significantly, and has hovered just above $20 per share since 2018. In late February, during COVID-19 closures in China, JMEI shares hit their bottom of $15.32 per share.

On Monday, JMEI's last day in trading on the NYSE, the company ended its troubled run at $19.93 per share.

Jumei's target consumer has been the young Chinese woman, for whom the company sells makeup and skincare products from brands including Kiehl's, Estee Lauder, and Shiseido. It was among the retail platforms that benefited early on the daily deal strategy to grow its user base.

In 2017, Jumei acquired a stake in Shenzhen Jiedian Technology Co., which sells power charging banks for venues such as restaurants, shopping malls, and beauty salons.

Jumei has been backed by Sequoia Capital, which held 19% in the company at the time of its listing. Other investors in the company have been K2 Capital and Success Origin.

Jumei was not immediately available for comment on Thursday.

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