Bakery chain Christine, a 2000s hit, announces closure amid corporate infighting.
Photo from CFP
By WU Rong
Two weeks ago, bakery chain Christine announced the closure of all its stores. Christine owes landlords, suppliers and employees 57 million yuan (US$8.1 million) and creditors have frozen the company’s bank accounts.
When Jiemian News went to the bakery’s Shanghai headquarters, the door was locked. The last entries in a visitors’ book were on March 19, apparently made by customers seeking refunds for gift cards. The storefront is empty. Calls go unanswered.
Christine was founded in 1993 in Shanghai. In the 1990s most bakeries still looked, smelled and tasted like a factory canteen.
Christine was one of the first places where customers could browse well-made, individually packed cakes and desserts in pleasantly decorated stores. In its heyday, Christine had over 1000 shops and was a chosen supplier for the Shanghai Expo in 2010. An HKEX filing announced that all stores were closed last year.
Christine went public in Hong Kong in 2012. And that was the last time the company made a profit. The next year, the losses began and since then it has never turned a profit.
Financial troubles and infighting were in the news long before the announcement. The drama started in June last year when Christine sold 202 million shares at HK$0.082 each. In July and August of that year, an amount close to the take from that sale, HK$16.5 million, disappeared.
From bank statements provided by founder and former CEO LUO Tianan, the recipient was China Huaneng Foundation Construction Investment, wholly owned by the man who replaced Luo as CEO, ZHU Yongning. The reasons for the wire transfer that took the money away were vague - “paying back liabilities” and “returning money to shareholders.”
Zhu took over as CEO when Luo was fired in 2018. And since then Luo, who still controls 15.2 percent of the company, has tried twice to have Zhu fired. Both attempts failed.
Christine was struggling with its bills last summer, Luo said the company would be in better shape if the money had been used for operational purposes.
The boardroom bake-off has caught the interests of both HKEX and the Hong Kong police. Both the wire transfer and Christine’s financial struggles count as material financial information, Luo said, which should have been disclosed to the market. The board even declined to answer his questions at a shareholders’ meeting.
In Luo’s opinion, Christine’s fall is down to the board who “don’t know a thing about running a company.”
“They fired the CFO, COO, everyone. They do not care about the shareholders,” he said. “As the founder, I feel a lot of pain.”
Zhu denied all the accusations in an interview with The Beijing News last week, counter-claiming that Luo owes him money. Zhu also claims that Christine was sustained by money he himself lent the company during the lockdown last year.
Christine has fallen from grace in the social-media era. Customers have moved on to rustic bread and artisan pastries freshly baked on-site. Christine’s central oven was still making the old cakes and rolls that elicit more nostalgia than appetite.
“Old department heads refuse to learn new things… Neither the taste nor the packaging is up-to-date with what customers what these days,” a former employee told National Business Daily in 2020.
“Struggling old food brands have one thing in common – they don’t innovate,” said Lin Yue, an equity research analyst. “So when the trendy cafes, bakeries and bubble tea shops stop being a social media phenomenon, no one remembers them anymore.”
In its HKEX filing, Christine pledged to resume operations in the first half of this year, as it is seeking diversity and proper financing to sort out the liquidity problem.
