QKL Stores Inc. Announces First Quarter 2015 Financial Results
-- 1Q15 Revenue Decreased by 7.7% to $92.6 million from $86.0 million in 1Q14 --
-- 1Q15 Gross Profit Decreased by 4.1% to $15.3 million from $14.7 million in 1Q13 --
DAQING, China, May 15, 2015 /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, 2015.
Mr. Zhuangyi Wang, Chairman and CEO, said, "We closed two stores in the first quarter, and finished the first quarter operating a total of 47 stores, comprised of 26 supermarkets, 17 hypermarkets and 4 department stores. As our new store opening plan for 2015, 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 2015 Financial Results
Revenue increased $6.6 million, or 7.7%, to $92.6 million for the three months ended March 31, 2015 from $86.0 million for the three months ended March 31, 2014. 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, 2014. Same store (42 stores) sales generated approximately $79.6 million in sales in the first quarter of 2015, a decrease of $0.7 million, or 0.9% compared with $80.3 million in net sales in the first quarter of 2014. New store sales increased, reflecting the opening of five new stores since January 1, 2014. The store generated approximately $10.8 million in sales in the first quarter of 2015.
Gross profit, or total revenue minus cost of sales, increased by $0.6million, or 4.1%, to $15.3million, or 16.5% of net sales, in the first quarter of 2015from $14.7 million, or 17.1% of net sales, in the first quarter of 2014. The change in gross profit was primarily attributable to an increase in net sales of $6.6million in the first quarter of 2015compared to the first quarter of 2014.The decrease in gross profit relative to net sales was due to competitions arising from the increasing challenge from the online shopping that have significant pricing pressure on our selling of high margin products.
Selling expenses were$16.3million, or 17.6% of net sales, in the first quarter of 2015, and$13.3 million, or 15.4% of net sales, in the first quarter of 2014. The change in selling expenses was mainly due to a increase in expenses in labor costs, promotion expenses, utilities for three months ended March 31, 2015 compared to the same period in 2014. In specific, labor costs increased by $0.8 million or 15.4%, to $6.0 million in the first quarter of 2015 from $5.2 million in the first quarter of 2014. Promotion expenses increased by $0.5 million, or 50.0%, to $1.5 million in the first quarter of 2015 from $1.0 million in the first quarter of 2014. Utilities increased by $0.4 million, or 28.6%, to $1.8 million in the first quarter of 2015 from $1.4 million in the first quarter of 2014.
General and administrative expenses decreased by $0.7 million, or 21.9%, to $2.5 million, or 2.7% of net sales, in the first quarter of 2015 from $3.2 million, or 3.8% of net sales, in the first quarter of 2014. The decrease was mainly due to the control of our administrative expenses.
Our net loss for the first three months of 2015 was $4.6 million, or $3.01 per diluted share, from $3.1 million, or $2.01 per diluted share in the prior year period. The number of shares used in the computation of diluted EPS was 1,522,326 for the first three months of 2015 and 2014.
Conference Call
The Company will conduct a conference call to discuss its first quarter 2015 results on Friday, May 15, 2015 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, |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Cash |
$ |
43,556,481 |
$ |
9,013,006 |
||||
| Restricted cash |
21,321,692 |
8,623,748 |
||||||
| Accounts receivable |
777,226 |
949,211 |
||||||
| Inventories |
36,059,844 |
62,605,754 |
||||||
| Other receivables |
20,798,536 |
21,375,611 |
||||||
| Prepaid expenses |
12,165,117 |
12,114,028 |
||||||
| Advances to suppliers |
8,142,582 |
8,653,037 |
||||||
| Deferred income tax assets – current portion |
2,830,110 |
2,839,714 |
||||||
| Total current assets |
145,651,588 |
126,174,109 |
||||||
| Property, plant and equipment, net |
38,315,997 |
37,843,171 |
||||||
| Land use rights, net |
679,640 |
684,375 |
||||||
| Deferred income tax assets – non-current portion |
61,937 |
61,681 |
||||||
| Other assets |
11,954 |
11,880 |
||||||
| Total assets |
$ |
184,721,116 |
$ |
164,775,216 |
||||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
| Short-term loans |
$ |
85,449,139 |
$ |
60,201,757 |
||||
| Accounts payable |
36,109,828 |
37,206,633 |
||||||
| Cash card and coupon liabilities |
14,240,625 |
14,539,728 |
||||||
| Customer deposits received |
1,990,598 |
2,005,136 |
||||||
| Accrued expenses and other payables |
23,413,936 |
23,147,611 |
||||||
| Income taxes payable |
119,810 |
241,189 |
||||||
| Total current liabilities |
161,323,936 |
137,342,054 |
||||||
| Total liabilities |
161,323,936 |
137,342,054 |
||||||
| 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, 2015 and December 31, 2014 |
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, 2015 and December 31, 2014 |
5,294 |
5,294 |
||||||
| Additional paid-in capital |
93,746,014 |
93,746,014 |
||||||
| Retained earnings – appropriated |
8,338,153 |
8,338,153 |
||||||
| Retained earnings |
(93,699,363) |
(89,116,190) |
||||||
| Accumulated other comprehensive income |
15,005,560 |
14,458,369 |
||||||
| Total shareholders' equity |
23,397,180 |
27,433,162 |
||||||
| Total liabilities and shareholders' equity |
$ |
$184,721,116 |
$ |
164,775,216 |
||||
| QKL STORES INC. AND SUBSIDIARIES |
||||||||
| Condensed Consolidated Statements of Income |
||||||||
| (Unaudited) |
||||||||
| Three Months Ended March 31, |
||||||||
| 2015 |
2014 |
|||||||
| Net sales |
$ |
92,557,686 |
$ |
86,032,676 |
||||
| Cost of sales |
77,297,468 |
71,300,517 |
||||||
| Gross profit |
15,260,218 |
14,732,159 |
||||||
| Operating expenses: |
||||||||
| Selling expenses |
16,331,821 |
13,280,183 |
||||||
| General and administrative expenses |
2,509,702 |
3,233,410 |
||||||
| Total operating loss |
18,841,523 |
16,513,593 |
||||||
| Loss from operations |
(3,581,305) |
(1,781,434) |
||||||
| Non-operating expense: |
||||||||
| Interest income |
86,441 |
230,098 |
||||||
| Interest expense |
(1,080,214) |
(1,499,243) |
||||||
| Total non-operating loss |
(993,773) |
(1,269,145) |
||||||
| Loss before income taxes |
(4,575,078) |
(3,050,579) |
||||||
| Income taxes |
8,095 |
5,872 |
||||||
| Net loss |
(4,583,173) |
(3,056,451) |
||||||
| Comprehensive income statement: |
||||||||
| Net loss |
(4,583,173) |
(3,056,451) |
||||||
| Foreign currency translation adjustment |
547,191 |
(753,173) |
||||||
| Comprehensive loss |
$ |
(4,035,982) |
$ |
(3,809,624) |
||||
| Basic loss per share of common stock |
$ |
(3.01) |
$ |
(2.01) |
||||
| Diluted loss per share |
$ |
(3.01) |
$ |
(2.01) |
||||
| Weighted average shares used in calculating loss per common stock – basic |
1,522,326 |
1,522,326 |
||||||
| Weighted average shares used in calculating lossper common stock – diluted |
1,522,326 |
1,522,326 |
||||||
| QKL STORES INC. AND SUBSIDIARIES |
||||||||
| Condensed Consolidated Statements of Cash Flows |
||||||||
| (Unaudited) |
||||||||
| Three Months Ended March 31, |
||||||||
| 2015 |
2014 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ |
(4,583,173) |
$ |
(3,056,451) |
||||
| Depreciation |
1,026,828 |
1,646,376 |
||||||
| Amortization |
7,546 |
7,383 |
||||||
| Share-based compensation |
- |
102,014 |
||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Accounts receivable |
175,243 |
241,021 |
||||||
| Inventories |
27,301,888 |
10,390,643 |
||||||
| Other receivables |
663,179 |
2,167,725 |
||||||
| Prepaid expenses |
(814) |
3,544,791 |
||||||
| Advances to suppliers |
544,248 |
2,185,374 |
||||||
| Accounts payable |
(1,246,364) |
(4,683,343) |
||||||
| Cash card and coupon liabilities |
(358,050) |
4,352,101 |
||||||
| Customer deposits received |
(22,771) |
(322,039) |
||||||
| Accrued expenses and other payables |
174,517 |
1,423,767 |
||||||
| Income taxes payable |
(121,906) |
(25) |
||||||
| Net cash provided by operating activities |
23,560,371 |
17,999,337 |
||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of property, plant and equipment |
(1,341,384) |
- |
||||||
| Increase of restricted cash |
(12,613,111) |
(81,623) |
||||||
| Net cash used in investing activities |
(13,954,495) |
(81,623) |
||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Repayment of bank borrowings |
(35,804,961) |
- |
||||||
| Bank loan borrowing |
60,705,683 |
3,268,054 |
||||||
| Net cash used in financing activities |
24,900,722 |
3,268,054 |
||||||
| Effect of foreign currency translation |
36,877 |
(228,009) |
||||||
| Net increase in cash |
34,506,598 |
21,185,768 |
||||||
| Cash – beginning of period |
9,013,006 |
9,245,212 |
||||||
| Cash – end of period |
$ |
43,556,481 |
$ |
30,202,971 |
||||
| Supplemental disclosures of cash flow information: |
||||||||
| Interest paid |
$ |
1,080,214 |
$ |
1,499,243 |
||||
| Income taxes paid |
$ |
171,121 |
$ |
5,847 |
||||
SOURCE QKL Stores Inc.
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