France’s consumer protection authority has fined fast-fashion giant Shein €40 million ($47.17 million) for deceptive commercial practices, including misleading promotional pricing and exaggerated environmental claims. The penalty follows a months-long investigation by the Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF), under France’s Ministry of Economy. The fine was issued to Infinite Style E-Commerce Co. Ltd. (ISEL), the company handling Shein’s operations in France.
Shein
According to the DGCCRF, ISEL misled consumers by manipulating pricing displays to exaggerate the value of its offers. Investigators found that the company often inflated original prices before applying so-called discounts or ignored previous promotions when setting reference prices.
As a result, shoppers were frequently presented with crossed-out prices and continuous markdowns that created the illusion of savings—when in many cases, there were none.
Between October 2022 and August 2023, the DGCCRF reviewed thousands of product listings on Shein’s website. Its findings showed that 57% of the verified promotions offered no real price reduction. Another 19% advertised greater discounts than were actually applied, while 11% turned out to be disguised price increases.
The investigation also targeted Shein’s environmental marketing. The DGCCRF found that the company overstated its sustainability efforts and used vague claims about eco-conscious practices without substantiating them.
The €40 million fine was finalized through a settlement process, approved by the Paris public prosecutor’s office. It marks one of the highest financial penalties of its kind in France.
In a statement, Shein said it had received notice from the DGCCRF in March 2024 and had implemented corrective actions within two months.
“All the issues raised were resolved over a year ago,” the company said. “ISEL takes its legal and regulatory obligations in France very seriously.”
Shein added that these changes did not impact final prices for consumers and reaffirmed its commitment to transparency and legal compliance.
The DGCCRF noted that it will continue to monitor Shein’s business practices to ensure ongoing compliance and safeguard consumer interests.
At first glance, Saks looked like exactly the kind of mess hedge funds love. Just months after the company borrowed $2.2 billion to finance its takeover of rival Neiman Marcus, the newly formed luxury retail powerhouse was already running short on cash. Creditors spooked by the pace of the slide rushed for the exits, offering the bonds for less than 40 cents on the dollar.
Saks bonds’ value dropped to just 1 cent – REUTERS/Angelina Katsanis
Bargain hunting hedge funds gleefully took the debt off their hands. This was, after all, a marquee name with valuable brands, prime real estate, big-name backers, and a business that executives said just needed a bit more time to steady itself. Firms including Pentwater Capital Management and Bracebridge Capital jumped in, chasing the promise of eye-popping returns.
Much is still to be determined in the wake of Saks’ bankruptcy this week, including any recovery for its creditors. Yet in the meantime, the episode is shaping up to be a painful lesson in the dangers of trying to catch a falling knife. The bonds that distressed-debt shops snapped up on the cheap are now being bid at less than 1 cent, according to broker runs. The hundreds of millions in extra financing they provided, which sits higher in the repayment pecking order, isn’t faring much better, changing hands around 10 cents.
Through Saks’ Chapter 11 filing, a clearer picture has emerged of a company that quickly veered off plan. Targets were missed, savings failed to materialise, cash drained at a rapid clip, and fixes meant to stop the bleeding never did. Bonds with roughly $486 million of face value held by Pentwater are now quoted at pennies on the dollar, as are about $257 million held by Bracebridge.
“This was a ticking time bomb, and the fuse was lit the day the merger was consummated,” said Mark Cohen, the former director of retail studies at Columbia Business School. “I’ve never seen anything go bad this fast; I don’t know that anyone has.”
A representative for Saks declined to comment beyond the company’s bankruptcy filing. Pentwater and Bracebridge declined to comment. Even after the staggering declines, Saks’ biggest creditors aren’t ready to throw in the towel.
In its bankruptcy filing, the company said it had secured roughly $1.75 billion in post-petition financing, including $1.5 billion from a group of senior secured bondholders betting a second act could yet salvage the retailer- and their own fortunes, possibly by converting battered debt positions into significant equity stakes.
Some will also collect fees for helping arrange the financing. What’s more, the structure of the post-bankruptcy financing Saks has lined up could allow certain debtholders to realise better returns on the company’s outstanding bonds than where they’re currently trading, some investors suggested.
Pentwater and Bracebridge are among those putting up more money, according to people with knowledge of the matter.
Whether it’s enough to turn around a company that burned through more cash than it generated last year remains to be seen. Perennially late payments have “damaged trust” with Saks’ suppliers, the retailer said in bankruptcy documents, and while new management is working to repair those relationships, some vendors may decide to take their business elsewhere.
The company is also facing stiff objections from unsecured creditors, including Amazon.com Inc., that are seeking to block access to the new financing package. The tech giant, which previously acquired a $475 million preferred equity stake in the luxury retailer, recently called its investment in Saks “presumptively worthless.” Other equity holders including Rhone Capital and Insight Partners also suffered significant losses, separate people familiar with the situation said.
Representatives for Amazon and Insight Partners didn’t respond to requests for comment. Rhone Capital declined to comment.
Some investors who opted not to participate in the latest debtor-in-possession financing were concerned that the rescue could echo other recent misfires. They pointed to First Brands Group, the bankrupt auto-parts supplier whose lenders put up more than $1 billion post bankruptcy, only to watch their super-senior bonds crater in value as the company burned through the cash and signalled it would need even more money.
With rescue financing, “you get a lot of structuring fees, an above-market interest rate, liens on the best collateral, an equity cushion below you, with the added upside that you’re in control as the restructuring process plays out,” said Rishi Goel, the global head of distressed debt at Aegon Asset Management.
“But it’s got to be structured correctly. The equity value below you has to be real,” Goel said. “If you’re misled, or the business is worth less than you thought or becomes worse than you thought, the value can dry up quickly.”
For now, Saks has said that stores under all its brands are open. A number of creditors say they are confident that new management, led by former Neiman Marcus Chief Executive Officer Geoffroy van Raemdonck, can steer the company through bankruptcy and, once it emerges, make its portfolio of luxury department stores profitable.
Not everyone is convinced. “The rationale for putting these two businesses together made no sense form the get go, and it’s hard to believe that these deep-pocketed masters of the universe fell for it,” Cohen said.
Rapha has made a major step forward with its international ambitions, unveiling its debut collection for the USA Cycling team. The high-profile London-based performance wear specialist said the association “ushers in a new era for American cycling”. It’s also a timely move, given the US will be staging the next summer Olympic Games in 2028.
Rapha
Rapha said it will be outfitting the USA’s “most talented athletes” through to the end of 2029, “bringing its signature style and panache to the ultimate stage for the sport”.
It also sees the team partnership taking Rapha into new disciplines such as Track, BMX Racing, and BMX Freestyle.
The debut collection draws inspiration from the 1984 Los Angeles Olympics, “a watershed moment for American cycling” when the home nation took nine medals.
Blending elements from the Stars and Stripes with a ‘Lightspeed’ pattern (on the front and back of the jerseys) is central to the designs with the latter “adding to a long tradition of using patterns to express motion and speed in sportswear”. Stripes are also an integral part of both Rapha’s design heritage and the history of cycling apparel, the brand noted. The kit’s lighter colouring ensures suitability to hot conditions.
The designs also incorporate a collegiate-style typeface, characteristic of American sports, accented with a stripe.
The jersey’s sleeves also feature star and stripe detailing, with the left arm showcasing the navy Rapha armband and script logo. The bib shorts contrast white striped stars and USA graphics with a navy base, designed to contour to the body and enhance the feeling of speed.
With story labels a long-standing Rapha tradition, such details are also inscribed inside of the garments with the collection featuring five unique story labels “celebrating the full range of USA Cycling disciplines”.
Of course, seeing as American interest in cycling “is at an all-time high”, with 112 million people there riding bikes in 2024, according to PeopleForBikes, replica kit and a range of merchandise will be available next month.
Rapha CEO Fran Millar, said: “This kit represents over a decade of world-class competition and innovation. We’ve left no stone unturned so that when USA Cycling athletes show up for their country, they can stand on the start line with total confidence.
“The starting pistol for LA has been fired and there is nothing more powerful for a sport than a home Games. The energy, the expectation, the history – Rapha will support American cycling to seize the opportunity with both hands.”
In November, Rapha also “marked a major milestone” by opening its first ‘Clubhouse’ in mainland China. Located on Donghu Road in the heart of Shanghai’s historic Hengshan-Fuxing Road Cultural Area, it said the new space becomes a “purposeful commitment to one of the fastest-growing cycling communities in the world”.
British luxury streetwear brand Represent has a new country president to lead its North American ambitions. Jim Anfuso, described as a veteran of the footwear and streetwear industry with “pivotal experience” managing the high-profile Adidas Yeezy business, has joined Represent’s executive leadership team.
Jim Anfuso, Represent’s new North America president
He’s tasked with accelerating Represent’s foothold in the US, “currently the brand’s fastest-growing market”. In his new role, Anfuso will oversee all countrywide operations, including retail expansion, wholesale partnerships, and the scaling of its performance line 247.
The role will also leverage Anfuso’s “deep experience in the footwear sector to refine Represent’s footwear strategy, a category the brand has identified as a key growth pillar”.
Represent noted the appointment “comes at a critical inflection point”, following the opening of the brand’s West Hollywood flagship and the “rapid adoption” of the 247 label.
As the brand “shifts from a cult British label to a global powerhouse”, it said Anfuso “brings a rare dual expertise in high-heat product strategy and operational infrastructure, a skillset honed during his tenure managing one of the most significant footwear partnerships in history”.
CEO Paul Spencer added: “As we enter our next phase of global expansion, the US market represents our most significant opportunity.
“Jim’s track record speaks for itself. From the minute we met… we knew he would be a great cultural fit with the wider leadership team and with [co-founder] George [Heaton] working side by side in our LA. office. Jim’s ability to navigate complex operational landscapes while maintaining brand integrity is exactly what Represent needs right now.”
George Heaton also said: “We have built Represent on ‘Relentless Effort’, and to crack the US market, we needed a leader who understands both the culture of streetwear and the mechanics of a billion-dollar operation. Jim shares our obsession with product and precision. This is a critical piece of the puzzle for the US business”
Anfuso said of his appointment: “Represent has achieved something rare: a hyper-loyal community that spans luxury, streetwear, and performance. My focus is now on operationalising that energy for the US market building the infrastructure, the team, and the strategy to take us from a ‘cult favourite’ to a dominant market leader.
“We are going to execute with the same level of precision and ambition that defined my previous work in this space.”
Politics8 years ago