VANCL reportedly in financial woe

Online apparel retailer VANCL Wednesday declined to comment on a series of rumors about its business, raising concerns over the company's cash flow situation.

Some insiders said yesterday that VANCL has decided to cancel or postpone its US IPO due to an expected loss of 1 billion yuan ($157.8 million) for its current financial year ending June 2012. The company's chief financial officer (CFO) is also rumored to have resigned.

"We have noticed those rumors and our management are discussing a response," Chen Chu, public relations director at VANCL, told the Global Times Wednesday, noting that he can not answer any questions on either the company's financial status or its CFO resignation.

The Beijing-based company saw an estimated loss of 600 million yuan last year, 21st Century Business Herald reported.

Chen Nian, the company's founder and CEO, said in response to the report that 2011 was a fast-growing year for VANCL during which its overall revenue increased by 150 percent. However, he did not disclose any figures on the company's profit or loss.

"For a young e-commerce company, losing money during its initial period is common," Chen Shousong, an e-commerce analyst at consulting firm Analysys International, told the Global Times Wednesday, adding that he thinks the projection of 1 billion yuan loss for VANCL's current fiscal year is quite believable.

However, analyst Chen noted that the huge loss will "certainly have a negative impact" on the company's market valuation for its IPO, and for a company founded in 2007, "it's time to make profit."

"In addition, since the US capital market remains uncertain, it's not a good time for VANCL to go public," Chen said, noting though that whether the company's cash flow can support its operation remains uncertain.

VANCL was scheduled to float in the US by the end of last year, aiming to raise up to $1 billion through the IPO. And the company revealed to the Global Times that it had submitted its listing application to the US Securities and Exchange Commission in November last year. But the company has not yet given any filing time frame for its IPO prospectus.

VANCL, the largest branded apparel e-commerce website in China, has received backing from private equity and venture capital firms so far including IDG and Ceyuan Ventures.