Friday, May 16, 2014

QKL Stores Inc. Announces First Quarter 2014 Financial Results

-- 1Q14 Revenue Decreased by 11.4% to $86.0 million from $97.1 million in 1Q13 -- 
 
-- 1Q14 Gross Profit Decreased by 12.0% to $14.7 million from $16.6 million in 1Q13 - 
 

DAQING, China, May 15, 2014 /PRNewswire/ -- QKL Stores Inc. (the "Company") (Nasdaq: QKLS), a leading regional supermarket chain in Northeastern China and Inner Mongolia, today announced its financial results for the first quarter ended March 31, 2014.
Mr. Zhuangyi Wang, Chairman and CEO, said, "We opened two hypermarkets in the first quarter, and finished the first quarter operating a total of 47 stores, comprised of 27 supermarkets, 16 hypermarkets and 4 department stores. As our new store opening plan slows for 2014, the two more new stores are going to open in the second half of the year, we expect our profitability to improve as we benefit from our improving new store sales, increased same store sales at existing stores and reduced store opening and promotional expenses."
"We were also pleased with the improvement of our operating cash flows in the first quarter due to a reduction in inventory after the peak Chinese New Year season and a decrease in other receivables attributable to cash recovery from our vendors after the busy holiday season. We are pleased with our execution in the first quarter and are setting the stage for increased top and bottom line growth in the coming quarters."
First Quarter 2014 Financial Results
Revenue decreased by $11.1 million, or 11.4%, to $86.0 million for the three months ended March 31, 2014 from $97.1 million for the three months ended March 31, 2013. Same store sales represents sales from stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2013. Same store (45 stores) sales generated approximately $81.8 million in sales in the first quarter of 2014, a decrease of $12.6 million, or 13.3% compared with $94.4 million in net sales in the first quarter of 2013. New store sales increased, reflecting the opening of two new stores since January 1, 2013. The stores generated approximately $4.2 million in sales in the first quarter of 2014. The number of stores including supermarkets/hypermarkets and department stores at March 31, 2014 was 47 versus 46 at March 31, 2013.
Gross profit decreased by $1.9 million, or 12.0%, to $14.7 million, or 17.1% of net sales, in the first quarter of 2014 from $16.6 million, or 17.1% of net sales, in the first quarter of 2013. The change in gross profit was primarily attributable to a decrease in net sales of $11.1 million in the first quarter of 2014 compared to the first quarter of 2013. We believe that our gross margin is likely to be between 16.8% and 17.3%, over the next few business quarters. New stores tend to be less profitable during their early months of operation. In addition, China's retail industry in general, and its supermarket industry in particular, are becoming more competitive every year. In this competitive marketplace, it is likely that we will focus on providing our customers with low prices in order to increase our market share and long-term sales volume.
Selling expenses were $13.3 million, or 15.4% of net sales, in the first quarter of 2014, and $13.3 million, or 13.7% of net sales, in the first quarter of 2013. The change in selling expenses was immaterial in the three months ended March 31, 2014 compared to the same period in 2013.
Our net loss for the first three months of 2014 was $3.1 million, or $2.01 per diluted share, from net income of $0.4 million, or $0.27 per diluted share in the prior year period. The number of shares used in the computation of diluted EPS was 1,522,326 and 1,510,828 for the first three months of 2014 and 2013, respectively.
At March 31, 2014, we had $30.2 million of cash compared to $32.5 million at March 31, 2013.
Conference Call
The Company will conduct a conference call to discuss its first quarter 2014 results on Thursday, May 15, 2014 at 8:30 am ET. Listeners may access the call by dialing #1-719-325-2455. To participate, please dial one of the local access numbers, listed below. The conference call identification number is 10046673.
 
Participant Dial In (Toll Free):   1-877-870-4263 
Participant International:         1-412-317-0790 
Canadian Dial In (Toll Free):      1-855-669-9657 
China (N) Toll Free:               4001-201203 
China (S) Toll Free:               4001-201203 
Hong Kong Toll Free:               800-905945 
 
About QKL Stores Inc.:
Based in Daqing, China, QKL Stores, Inc. is a leading regional supermarket chain company operating in Northeastern China and Inner Mongolia. QKL Stores sells a broad selection of merchandise, including groceries, fresh food, and non-food items, through its retail supermarkets, hypermarkets and department stores; the company also has its own distribution centers that service its supermarkets. For more information, please access the Company's website at: www.qklstoresinc.com.
Safe Harbor Statement
Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The forward looking statements are subject to a number of risks and uncertainties including market acceptance of the Company's services and projects and the Company's continued access to capital and other risks and uncertainties. The actual results the Company achieves may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties. These statements are based on our current expectations and speak only as of the date of such statements.
Contact Information
QKL Stores, Inc.
In China:
Mike Li, Investor Relations
+86-459-460-7987
(Financial Tables on Following Pages)
 
 
                 QKL STORES INC. AND SUBSIDIARIES 
               Condensed Consolidated Balance Sheets 
                                       March 31,     December 31, 
                                           2014           2013 
                                      -------------  ------------- 
                                       (Unaudited) 
ASSETS 
Cash                                  $  30,202,971  $   9,245,212 
Restricted cash                           8,598,008      8,668,882 
Accounts receivable                         313,906        557,745 
Inventories                              53,880,184     64,724,923 
Other receivables                        19,562,646     21,979,152 
Prepaid expenses                          6,315,204      9,915,479 
Advances to suppliers                     5,589,121      7,822,660 
Income taxes receivables                  1,725,573      1,739,773 
Deferred income tax assets -- 
 current portion                          2,765,569      2,788,918 
                                       ------------   ------------ 
Total current assets                    128,953,182    127,442,744 
Property, plant and equipment, net       38,365,069     40,247,576 
Land use rights, net                        705,134        718,337 
Deferred income tax assets -- 
 non-current portion                         66,956         66,956 
Other assets                                 17,168         17,276 
                                       ------------   ------------ 
Total assets                          $ 168,107,509  $ 168,492,889 
                                       ============   ============ 
LIABILITIES AND SHAREHOLDERS' 
EQUITY 
Short-term loans                      $  43,799,883  $  40,889,761 
Accounts payable                         30,898,432     35,840,964 
Cash card and coupon liabilities         22,634,708     18,465,030 
Customer deposits received                  656,549        984,308 
Accrued expenses and other payables      20,340,192     18,827,472 
Total current liabilities               118,329,764    115,007,535 
                                       ------------   ------------ 
Total liabilities                       118,329,764    115,007,535 
                                       ------------   ------------ 
 
Shareholders' equity 
Common stock, $0.001 par value per 
 share, authorized 100,000,000 
 shares, issued and outstanding 
 1,522,326 shares at March 31, 2014 
 and December 31, 2013                        1,522          1,522 
Series A convertible preferred 
 stock, par value $0.01, authorized 
 10,000,000 shares, issued and 
 outstanding 529,412 shares at March 
 31, 2014 and December 31, 2013               5,294          5,294 
Additional paid-in capital               93,439,972     93,337,957 
Retained earnings -- appropriated         8,329,586      8,329,586 
Retained earnings                      (65,202,245)   (62,145,794) 
Accumulated other comprehensive 
 income                                  13,203,616     13,956,789 
                                       ------------   ------------ 
Total shareholders' equity               49,777,745     53,485,354 
                                       ------------   ------------ 
Total liabilities and shareholders' 
 equity                               $ 168,107,509  $ 168,492,889 
                                       ============   ============ 
 
 
                  QKL STORES INC. AND SUBSIDIARIES 
             Condensed Consolidated Statements of Income 
                                              (Unaudited) 
                                      Three Months Ended March 31, 
                                    -------------------------------- 
                                          2014             2013 
                                    -----------------  ------------- 
 
Net sales                            $     86,032,676  $  97,057,191 
Cost of sales                              71,300,517     80,417,743 
                                        -------------   ------------ 
Gross profit                               14,732,159     16,639,448 
                                        -------------   ------------ 
 
Operating expenses: 
Selling expenses                           13,280,183     13,324,213 
General and administrative 
 expenses                                   3,233,410      2,518,336 
                                        -------------   ------------ 
Total operating loss                       16,513,593     15,842,549 
                                        -------------   ------------ 
 
(Loss) income from operations             (1,781,434)        796,899 
                                        -------------   ------------ 
 
 
Non-operating expense: 
Interest income                               230,098        193,573 
Interest expense                          (1,499,243)      (297,608) 
                                        -------------   ------------ 
Total non-operating loss                  (1,269,145)      (104,035) 
                                        -------------   ------------ 
 
(Loss) income before income taxes         (3,050,579)        692,864 
 
Income taxes                                    5,872        289,594 
                                        -------------   ------------ 
 
Net (loss) income                         (3,056,451)        403,270 
                                        =============   ============ 
 
Comprehensive income statement: 
Net (loss) income                         (3,056,451)        403,270 
Foreign currency translation 
 adjustment                                 (753,173)      1,185,780 
                                        -------------   ------------ 
Comprehensive (loss) income          $    (3,809,624)  $   1,589,050 
                                        =============   ============ 
 
 
 
Basic (loss) earnings per share of 
 common stock                        $         (2.01)  $        0.27 
Diluted (loss) earnings per share    $         (2.01)  $        0.27 
 
Weighted average shares used in 
 calculating (loss) earnings per 
 common stock -- basic                      1,522,326      1,476,735 
Weighted average shares used in 
 calculating (loss) earnings per 
 common stock -- diluted                    1,522,326      1,510,828 
                                        =============   ============ 
 
 
 
                  QKL STORES INC. AND SUBSIDIARIES 
           Condensed Consolidated Statements of Cash Flows 
                                              (Unaudited) 
                                      Three Months Ended March 31, 
                                    -------------------------------- 
                                          2014             2013 
                                    -----------------  ------------- 
CASH FLOWS FROM OPERATING 
ACTIVITIES: 
Net (loss) income                    $    (3,056,451)  $     403,270 
Depreciation                                1,646,376      1,678,164 
Amortization                                    7,383          8,036 
Share-based compensation                      102,014        204,117 
Deferred income tax                                 -      (464,414) 
Loss on disposal of fixed assets                    -         25,491 
Adjustments to reconcile net 
income to net cash provided by 
operating activities: 
Accounts receivable                           241,021        429,824 
Inventories                                10,390,643     16,601,846 
Other receivables                           2,167,725        537,181 
Prepaid expenses                            3,544,791      1,776,872 
Advances to suppliers                       2,185,374      6,062,785 
Accounts payable                          (4,683,343)    (5,286,996) 
Cash card and coupon liabilities            4,352,101      2,683,392 
Customer deposits received                 (322,039 )      1,976,833 
Accrued expenses and other 
 payables                                   1,423,767    (2,453,301) 
Income taxes payable                             (25)         85,795 
                                        -------------   ------------ 
Net cash provided by operating 
 activities                                17,999,337     24,268,895 
                                        -------------   ------------ 
 
CASH FLOWS FROM INVESTING 
ACTIVITIES: 
Purchases of property, plant and 
 equipment                                   (81,623)      (350,987) 
                                        -------------   ------------ 
Net cash used in investing 
 activities                                  (81,623)      (350,987) 
                                        -------------   ------------ 
 
CASH FLOWS FROM FINANCING 
ACTIVITIES: 
Bank loan borrowing                         3,268,054              - 
                                        -------------   ------------ 
Net cash used in financing 
 activities                                 3,268,054              - 
                                        -------------   ------------ 
 
Effect of foreign currency 
 translation                                (228,009)         61,898 
 
Net increase in cash                       21,185,768     23,917,908 
Cash -- beginning of period                 9,245,212      8,479,413 
                                        -------------   ------------ 
Cash -- end of period                $     30,202,971  $  32,459,219 
                                        =============   ============ 
 
Supplemental disclosures of cash 
flow information: 
Interest paid                        $      1,499,243  $     297,608 
Income taxes paid                    $          5,847  $     203,799 
                                        =============   ============ 
 
 
SOURCE QKL Stores Inc.
/Web site: http://www.qklstoresinc.com

No comments:

Post a Comment