FashionValet and its founder Vivy Yusof are no strangers to speculation. As a rather popular brand, FashionValet has found its way into headlines quite often since its inception in 2010, both for good and bad news.
Its name in the headlines may soon fade out though, as FashionValet has recently announced that it will be shutting down its platform to instead focus on dUCk and LILIT.
However, the closure of the brand isn’t the main thing curious netizens are focusing on. It’s what’s happening behind closed doors that people want to know about.
Upon hearing the news, Aliff Ahmad, co-founder of Scrut.my, wrote a lengthy Facebook post to “scrut”inise FashionValet. Published on July 26, the post now boasts over 5.6K engagements.
Scrut.my is described as a platform that provides you with a full Japanese car auction history and UK vehicle history. Scrut.my also runs a separate site, Interepo.com, which allows you to look up company reports.
This isn’t Aliff’s first time making such a post though; he’s been on FashionValet’s case since as early as 2019, making public Facebook and blog posts about FashionValet’s operations that just didn’t sit right with him.
His July 26 post went into further detail in his scrutinisation of FashionValet, and here are some allegations that have come up.
1. Khazanah was a major investor of FashionValet, meaning taxpayer money went into the now-closed site
In 2018, the ecommerce fashion site closed its series C investment from Khazanah Nasional Bhd. Khazanah, as many would know, is the strategic investment fund of the Government of Malaysia.
Another investor in its Series C funding round was Permodalan Nasional Berhad (PNB), one of the largest fund management companies in Malaysia, and an instrument of the Government’s New Economic Policy.
In total, Tracxn reports that the funding received for its Series C came up to about US$12.06 million. Meanwhile, FashionValet’s total funding over the years reportedly amounts to about US$19.3 million.
So the question many are asking is where did that substantial amount of money go?
Some like Aliff point towards the founder’s “luxurious” lifestyle as a cause of concern, believing that it’s proof of fund mismanagement. However, she is an influencer after all, and receiving various sponsored items isn’t out of the ordinary.
Other netizens have given their two cents too, saying that perhaps it shouldn’t be the founders who are solely to blame (if the mismanagement of funds is indeed true).
They believe that Khazanah and PNB’s investment processes should also be questioned, particularly if they injected the funds knowing that FashionValet was operating at a loss.
2. The founder’s allowance was allegedly increased
In his Facebook post, Aliff claimed that the director’s allowance had been increased.
However, we’re not sure how he concluded that the directors’ allowances went up over the years, because according to the company’s latest annual report, the directors’ remuneration actually went down.
In 2019, it had been RM2,152,416, while in 2020 it was RM1,453,866. Furthermore, in 2020, no additional bonuses or emoluments were made.
3. dUCk was not owned by FashionValet at first
In an article by The Star in 2019, Vivy herself had said that dUCk and FashionValet are two separate companies. The Star reported that dUCk is parked under 30 Maple Sdn Bhd, whilst FashionValet came under FashionValet Sdn Bhd.
However, sometime in between then and now, it appears that FashionValet acquired 30 Maple, if Vivy’s recent statements to SAYS are of anything to go by.
In her words, “[FashionValet’s] investors invested into FashionValet, which fully owns dUCk and LILIT.”
We were able to confirm that the acquisition of 30 Maple Sdn Bhd was made in December 2018 in FashionValet’s 2018 annual report, after the company’s Series C funding in March.
In Aliff’s eyes though, the closure of FashionValet means that its funds will now be channeled to dUCk and LILIT., though they were never meant for those two brands in the first place.
Thus, with regards to dUCk specifically, Aliff and other critics have come to the conclusion that FashionValet had intentionally bought dUCk, knowing that it would be closing its own operations, so that its funds could easily go towards the more lucrative brand instead.
4. In 2018 (before dUCk was sold), a dividend of RM4.2 million was allegedly taken out
According to Aliff’s research, before dUCK was sold, as much as RM4.2 million worth of dividends were taken from the company in 2018.
While this might seem like the company is “successful”, Aliff theorised that “orang main geran dan VC kerajaan ni nak cashout je,” meaning that those in charge of the grants and the government venture capitalists just wanted to cash out from the company.
However, there are those who doubt Aliff’s screenshots, claiming that they could’ve been doctored, especially because they lack headers and specific links or details to lead netizens to the relevant reports he’s quoting.
We decided to check for ourselves and found that 30 Maple Sdn Bhd’s annual reports from 2017 and 2018 did corroborate what Aliff had posted.
5. FashionValet’s physical stores seem to have received expensive renovations
In Aliff’s heated post, he also claimed that FashionValet’s renovation costs are high, though he did not provide any proof for that detail.
Still, considering FashionValet’s locations in high-end places such as Pavilion Kuala Lumpur, we’re sure rental and renovations were not cheap.
Aliff questioned why a company initially pitched and described as an online boutique is busy trying to create costs for an outlet that “we know costs a lot of money and has high operating expenses”.
In FashionValet’s defense, it’s not a bad decision to try and capture the offline market. In hindsight, it might not have resonated with its audience, but it’s not rare for ecommerce businesses to try and grow their offline presence.
6. FashionValet had a reportedly unconfirmed web development write-off of RM2.284 million in 2017.
In 2020, Aliff posted about how FashionValet had a “web development written off” in 2017 on its financial statement.
The screenshots he shared then also had an auditors’ note stating that they were unable to obtain confirmation from both parties for the web development write-off.
We were able to confirm through Fashion Valet Sdn Bhd’s annual report in 2017 that the auditors did include a RM2.284 million web development write-off in the “loss from operations” section, and also made the comment about being unable to obtain confirmation.
Aliff thus insinuated that the web development written off could be a cover-up for something else. His first business was an IT firm and software house, so he believed he could make an educated opinion on this.
According to him, he knew the standard rates of web development templates, and stated that the one used by FashionValet at the time (Magento) was not pricy, at least not to the point of needing funds in the millions.
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In any case, FashionValet’s closure has still been a disappointing piece of news. The most egregious issue, personally, is the fact that FashionValet had started out as a platform for Malaysian designers to reach new customers.
But now, the only designers the company is supporting are the ones from dUCk and LILIT.
In a way, the founders have benefitted from other small companies that supported FashionValet, and used those funds for its own in-house brands instead.
With that said, the truth is, all these speculations are just that—speculations. We do not have FashionValet or Vivy Yusof’s full story.
Whatever the truth is, we hope the company is taking its role and its duty to investors responsibly.
Editor’s Update 04/08/22: We’ve updated this article with our own findings about certain aspects of FashionValet’s finances using official SSM reports we purchased.
Editor’s Update 05/08/22: We’ve updated this article with our own findings about certain aspects of 30 Maple’s finances using official SSM reports we purchased.
- Read other articles we’ve written about Malaysian startups here.
Featured Image Credit: Vivy Yusof / FashionValet