Sample indicators do not comply with the national regulations October Mommy IPO warning

Shanghai October Mommy Network Co., Ltd. (hereinafter referred to as "October Mommy") recently disclosed the prospectus to be related to the IPO. As a omni-channel professional brand retailer of maternity products, October Mommy's product quality and safety is particularly sensitive. However, in October, Mommy repeatedly appeared in the case that the product was unqualified and was exposed by the relevant departments. At the same time, one of the major suppliers of Mommy in October was also punished by the relevant authorities for product problems. This can not help but make consumers worried about the quality and safety of October Mommy's products. In October, Mommy's IPO road also ignited a "red light."

The side of the prospectus is exposed and the sampling is not up to standard

On May 25th, October Mommy disclosed the IPO of the prospectus on the official website of the China Securities Regulatory Commission. Ironically, on the same day, October Mommy’s products were unqualified by the Beijing Consumers Association’s name, which not only made the October Mommy, which is at the peak of the IPO, quite awkward, but also made consumers’ products for the company. Quality safety has certain concerns.

According to the results of the Beijing Consumers Association's baby children's clothing comparison test released on May 25th by the Beijing Consumers Association official website, the Beijing Consumers Association recently conducted a commodity comparison test on baby clothing products sold on the online shopping platform. The results showed that 9 of the 60 samples did not meet the national standard requirements, and 18 samples showed the presence of defects. Among them, the sample index of October Mommy does not meet the national standards.

Specifically, in the Tmall October Mommy flagship store, the baby hemiplegic kit with a unit price of 119 yuan is sold. The nominal manufacturer of the product is Shanghai October Mommy Network Co., Ltd., and the non-standard items are ropes and pulls. band.

It should be pointed out that this is not the first time that Mommy's products have been exposed in October. Earlier, in October, Mommy received the product inspection failure notice of the quality inspection agency three times. For example, from December 2015 to February 2016, the General Administration of Quality Supervision, Inspection and Quarantine organized the first batch of national supervision sampling tests for the quality of 25 kinds of knitted underwear, etc. in 2016, and the knitted underwear sold by Mummy in October was unqualified. The unqualified item is the PH value. In addition, on January 27, 2016, the General Administration of Quality Supervision, Inspection and Quarantine issued the “Notice on the National Inspection of 8 Kinds of Product Quality for Vehicle Gasoline in 2015”, in which the knitted underwear operated by Mommy in October was unqualified. The unqualified item is the fiber content. Subsequently, in October, Mommy also recalled all the unqualified products and returned them to the outsourced manufacturer for rectification.

It is understood that the main products of October Mommy include maternity clothing, cosmetics for pregnant women, pregnancy-related products and services. In fact, maternity products are personal consumer products, consumers pay special attention to product quality and safety, including whether the research and development design meets the principles of practicality and comfort, whether the raw materials are non-toxic and harmless, whether the production process meets the requirements, and the inspection and quarantine indicators. Whether it meets the standards, etc.

The famous economist Song Qinghui said in an interview with the Beijing Business Daily that for a omni-channel professional brand retailer of maternity products, due to the particularity of the users of the products, the October Mommy products repeatedly listed on the blacklist. There is a big “defect” in product quality, which may lead to a crisis of integrity. In addition, Song Qinghui said that frequent product sampling failures will have a huge negative impact. For the company, this will make the brand image accumulated by the company for many years obliterated and even become a major obstacle in the IPO process. For consumers, it is equal to trampling on consumers' rights.

Major suppliers have been punished

It is worth mentioning that one of the top five suppliers of Mommy in October was punished by relevant departments for product quality problems.

It is reported that the October Mommy production and procurement model is divided into outsourcing production mode, outsourcing processing mode and independent production mode. In addition to functional clothing, the rest of October Mommy's products are mainly produced and outsourced. In the prospectus, Mommy also said in October that the company mainly uses ODM's outsourcing production model. If there are any defects in the products developed or produced by outsourced manufacturers or subcontractors, the company may have to bear corresponding responsibilities, thus facing the risk of brand reputation and damage to the corporate image.

Looking at the major suppliers of October Mommy in the past three years, Shanghai Wenbang Garments Co., Ltd. is one of the company's top five suppliers for three consecutive years in 2014-2016. Mainly for the October Mommy to provide general maternity clothes, ordinary fabrics, suppliers of types are outsourced manufacturers, subcontractors and raw material suppliers. In October, Mummy said in the prospectus that the company has established a relatively complete qualified outsourcing manufacturer, outsourcing processor selection and product quality monitoring mechanism in the long-term business process. However, the Beijing Business Daily reporter found that the Shanghai Putuo District Market Supervision Administration had confiscated Shanghai Wenbang Clothing Co., Ltd. in February 2016 after consulting the relevant information of Shanghai Wenbang Garment Co., Ltd. in the National Enterprise Credit Information Publicity System. The illegal income of 100 yuan, a fine of 680 yuan and the administrative punishment measures ordered to stop production and sales of unqualified products.

The reason is that in October 2015, Mummy entrusted to Shanghai Wenbang Garment Co., Ltd. to produce 4 pieces of October Mummy brand black and gray tops that failed. It is reported that on October 9, 2015, Shanghai Putuo District Market Supervision Administration commissioned Shanghai Quality Supervision and Inspection Technology Research Institute to carry out sampling inspection of the above products, which was found to be unqualified after comprehensive judgment. Shanghai Wenbang Garments Co., Ltd. has the main types of illegal acts that are used by producers and sellers to dope, adulterate, fake, and shoddy, or to pretend to be qualified products with substandard products.

In an interview, Song Qinghui believed that in the case of problems with the company's product quality, it should prevent the recurrence of subsequent product quality problems by urgently replacing ODM manufacturers and recalling problematic products. However, the prospectus shows that in 2016, Shanghai Wenbang Clothing Co., Ltd. is still among the top five suppliers of Mommy in October. And the amount of purchases of October Mommy in Shanghai Wenbang Garments Co., Ltd. in 2016 was 9,438,600 yuan, which was not reduced compared with the purchase amount of 7,529,800 yuan in 2015. In fact, in the prospectus, Mummy stressed in October that before the formal cooperation, the relevant personnel of the Mummy Production Department in October will understand the status, level and product characteristics of the existing customers of the supplier in the industry. Conduct on-site inspection and inspection, mainly to evaluate the quality objectives of the factory. Song Qinghui believes that under this circumstance, the problem still exists in the quality of Shanghai Wenbang Garments Co., Ltd. from the side, there may be a big problem in the company management mechanism. Poor management of suppliers, management confusion, or a major risk in the company's IPO process.

Expanding direct sales stores attract investors

In addition to the hidden dangers of product quality and safety, October Mommy plans to use part of the raised funds to increase the construction of direct stores, which also worried investors, because the prospectus shows that October Mommy’s direct store closed in October. The number has increased compared to 2014 and 2015, but now it is ready to increase the number of direct stores.

According to the prospectus, in October, Mommy intends to raise about 219 million yuan for the construction of marketing network, design and testing center, information system and other projects, and to supplement other working capital related to the main business. Specifically, in October, Mommy intends to use 24.9632 million yuan of funds raised for marketing network construction projects, and invested 20,634,300 yuan in the design and testing center project. In addition, the investment in the information system construction project was 73.367 million yuan. Finally, the 100 million yuan raised funds were invested in other working capital projects related to the main business.

Regarding the marketing network construction project, October Mommy said that 51 new direct-operated stores will be built according to the company's existing marketing network and future development goals. Specifically, there are 6 flagship stores and 14 specialty stores in the form of direct rental, and 31 new counters are added in the mall joint venture. Referring to the reasons for the project construction, October Mommy admitted that as of the end of 2016, the company had 224 direct stores, including 42 shops with more than 50 square meters and only 4 shops with more than 100 square meters. The existing store area is small and lacks space, which directly leads to restrictions on store design and product display and display. Each store can only selectively purchase and display goods, which affects the customer's shopping experience and brand image. The “Marketing Network Construction Project” will increase the number of directly-operated stores, further penetrate into key areas, and strengthen offline direct-sale stores as an important entry point for the company's online and offline sales channels.

It is worth mentioning that the prospectus shows that in October 2016, Mommy added 20 directly operated stores, but at the same time closed 36 directly operated stores. The number of closed stores in 2016 was three times that of 12 closed in 2015, and 8 more than the 28 closed in 2014. For the reason of the closure, October Mommy said that because the business performance did not meet expectations, the mall positioning and brand positioning no longer match or the contract expires, but the shop does not meet the company's needs. Among them, because of the poor management of the shopping malls and the adjustment of the business category of the mall, October Mommy closed the store separately. In addition, the number of stores closed by the company's outlets was 34.

In an interview, Song Qinghui said that in October, Mommy closed 36 direct-operated stores in 2016. This time, she is preparing to increase the number of directly-operated stores, which may lead to repeated waste. Therefore, whether the marketing network construction project can meet expectations is also uncertain.

In response to relevant questions, the Beijing Business Daily reporter sent an interview letter to the mailbox disclosed by Mummy in October in the prospectus, but as of press time, the reporter did not receive a reply.

Beijing Business Daily reporter Dong Liang Gao Ping

(Editor: HN666)