QKL Stores Inc. Announces Fourth Quarter and Full Year 2013 Financial Results

News provided by

QKL Stores Inc.

Apr 04, 2014, 06:30 ET

DAQING, China, April 4, 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 fourth quarter and full year financial results ended December 31, 2013.

Mr. Zhuangyi Wang, Chairman and CEO, said, "As QKL expands its market presence in northeast China, we are uniquely positioned against our local competitors through our large product offering, strong supplier relationships, efficient distribution network and state-of-the-art IT system.  We are comfortable with our opportunities in 2014 and believe we'll see an improvement in operating expenses and profit growth in coming quarters.

"In 2013, we closed three stores that have approximately 6,500 square meters of space. As of December 31, 2013, we operated 27 supermarkets, 14 hypermarkets, 4 department stores and 2 distribution centers situated in Daqing, and Harbin, respectively.

"As we advance into 2014, we expect to open three new supermarket or hypermarket stores this year. We maintain confidence in our strategy of strengthening our store presence in Tier 4 and 5 cities in northeastern China as well as in our core region of operation around Daqing where the majority of our older stores are based."

Fourth Quarter 2013 Financial Results

Revenue in the fourth quarter of 2013 decreased by 21.5% to $67.5 million from $86.0 million in the fourth quarter of 2012. Comparable stores are stores that were opened for at least one year before the beginning of the comparison  period, or by January 1, 2012. Those 45 stores generated approximately $67.5 million in sales in the fourth quarter of 2013, representing a decrease of $5.2 million, or 7.2% compared with $72.7 million in sales in fiscal 2012.

Gross profit decreased by 21.7% year over year to $11.5 million, compared to $14.6 million in the prior year period. Gross profit as a percentage of revenue for the fourth quarter of 2013 was 17.0%, compared to 17.0% for the fourth quarter of 2012.

Operating expenses decreased by 17.2% to $17.3 million compared to $20.9 million in the prior year period. This was primarily a result of our decrease in net sales in the fourth quarter of 2013.

We had a net loss of $11.6 million in the fourth quarter of 2013 compared with net loss of $30.8 million in the fourth quarter of 2012. Excluding the impairment of goodwill, we had a net loss of $11.6 million in the fourth quarter of 2013 compared with net income of $4.1 million in the fourth quarter of 2012.

Full Year 2013 Financial Results

Revenue decreased by $82.8 million, or 22.6%, to $282.8 million for fiscal 2013 from $365.6 million for fiscal 2012. The change in net sales was primarily attributable to the following: comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2012. Those 45 stores generated approximately $277.7 million sales in fiscal 2013, a decrease of $50.2 million, or 15.3% compared with $327.9 million sales in fiscal 2012.

Gross profit, or total revenue minus cost of sales, was decreased by $14.0 million, or 22.4%, to $48.4 million, or 17.1% of net sales, in fiscal 2013 from $62.4 million, or 17.1% of net sales, in fiscal 2012. The change in gross profit was primarily attributable to net sales decreased by $82.8 million in fiscal 2013 compared to fiscal 2012.

Operating expenses decreased by $12.2 million, or 20.7%, to $46.9 million, or 16.6% of net sales, in fiscal 2013 from $59.1 million, or 16.2% of net sales, in fiscal 2012. The change in selling expense was mainly due to decreases in labor costs, and utilities for fiscal 2013 compared with fiscal 2012. In particular, labor costs decreased by $3.3 million or 14.6%, to $19.3 million in fiscal 2013 from $22.6 million in fiscal 2012.  Utilities decreased by $1.5 million, or 20.3%, to $6.2 million in fiscal 2013 from $7.7 million in fiscal 2012.

We had a net loss of $14.3 million in fiscal 2013 compared with net loss of $31.0 million in fiscal 2012. Excluding the impairment of goodwill, adjusted net loss for fiscal 2013 changed to $14.3 million, or $(9.41) per diluted share, from adjusted net income of $4.3 million, or $3.31 per diluted share for fiscal 2012. The number of shares used in the computation of diluted EPS (excluding the impairment of goodwill) increased by 15.6% to 1,519,258 shares in fiscal 2013 from 1,313,684 shares in fiscal 2012.

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

QKL STORES INC. AND SUBSIDIARIES

Consolidated Balance Sheets



December 31, 2013

December 31, 2012






ASSETS




Cash

$

9,245,212

$

8,479,413

Restricted cash

8,668,882


253

Accounts receivable

557,745


796,897

Inventories

64,724,923


59,812,645

Other receivables

21,979,152


18,042,360

Prepaid expenses

9,915,479


11,083,708

Advances to suppliers

7,822,660


9,525,250

Income taxes receivables

1,739,773


-

Deferred income tax assets - current portion

2,788,918


3,068,803








Total current assets

127,442,744


110,809,329

Property, plant equipment, net

40,247,576


45,439,360

Land use rights, net

718,337


724,760

Deferred income tax assets - non-current portion

66,956


3,259,129

Other assets

17,276


12,976








Total assets

$

168,492,889

$

160,245,554








LIABILITIES AND STOCKHOLDERS' EQUITY






Short term bank loans

40,889,761


15,832,555

Accounts payable

35,840,964


30,900,586

Cash card and coupon liabilities

18,465,030


18,604,188

Customer deposits received

984,308


1,248,278

Accrued expenses and other payables

18,827,472


28,097,212

Income taxes payable

-


2,726








Total current liabilities

115,007,535


94,685,545

Warrant liabilities

-


-








Total liabilities

115,007,535


94,685,545








Commitments and contingencies

-


-








Shareholders' equity






Common stock, $0.001 par value per share, authorized 100,000,000 shares, issued and
outstanding 1,522,326 and 1,443,949 shares at December 31, 2013 and December 31,
2012* respectively

1,522


1,444

Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares, issued
and outstanding 529,412 and 2,386,110 shares at December 31, 2013 and December 31,
2012

5,294


23,861

Additional paid-in capital

93,337,957


92,503,000

Retained earnings - appropriated

8,329,586


8,323,312

Retained earnings

(62,145,794)


(47,841,708)

Accumulated other comprehensive income

13,956,789


12,550,100








Total shareholders' equity

53,485,354


65,560,009








Total liabilities and shareholders' equity

$

168,492,889

$

160,245,554

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Operations



Years Ended December 31,


2013

2012






Net sales

$

282,790,433

$

365,624,781

Cost of sales

234,421,906


303,198,690

Gross profit

48,368,527


62,426,091








Operating expenses:






Selling expenses

46,854,916


59,084,865

General and administrative expenses

10,384,659


9,231,987

Impairment of goodwill

-


26,697,561

Total operating expenses

57,239,575


95,014,413








Loss from operations

(8,871,048)


(32,588,322)
















Non-operating income(expense):






Interest income

441,718


259,713

Interest expense

(1,386,810)


(1,014,145)

Total non-operating income

(945,092)


(754,432)








Loss before income tax

(9,816,140)


(33,342,754)








Income taxes

4,481,672


(2,300,214)








Net loss

$

(14,297,812)

$

(31,042,540)

 

Comprehensive loss statement: 














Net loss

(14,297,812)


(31,042,540)

Foreign currency translation adjustment

1,406,689


1,322,788








Comprehensive loss

$

(12,891,123)

$

(29,719,752)

 

*Basic earnings per share of common stock

$

(9.41)

$

(23.63)

*Diluted earnings per share

$

(9.41)

$

(23.63)

*Weighted average shares used in calculating net income per ordinary share - basic

1,519,258


1,313,684

*Weighted average shares used in calculating net income per ordinary share - diluted

1,519,258


1,313,684

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows



Years Ended December 31,


2013

2012






CASH FLOWS FROM OPERATING ACTIVITIES:




Net loss

$

(14,297,812)

$

(31,042,540)

Depreciation-property, plant and equipment

6,502,288


6,702,740

Amortization

29,968


29,391

Deferred income tax

3,631,238


(3,330,517)

Loss on disposal of property, plant and equipment

2,850


(303,396)

Share-based compensation

816,468


850,381

Impairment of goodwill

-


26,697,561

Provision on inventory, other receivables and sales return

518,453


453,311

Adjustments to reconcile net income to net cash provided by operating activities:






Accounts receivable

261,888


(680,445)

Inventories

(2,895,295)


(5,481,236)

Other receivables

(3,018,049)


(5,289,513)

Prepaid expenses

1,509,946


(4,437,289)

Advances to suppliers

1,990,054


713,061

Accounts payable

3,865,732


2,262,687

Cash card and coupon liabilities

(743,884)


2,454,996

Customer deposits received

(301,087)


309,322

Accrued expenses and other payables

(10,898,312)


13,357,512

Income taxes payable

(1,718,925)


(225,903)

Net cash (used in)/provided by operating activities

(14,744,479)


3,040,123








CASH FLOWS FROM INVESTING ACTIVITIES:






Purchases of property, plant and equipment

(598,043)


(9,411,202)

Sales proceeds of fixed assets disposal

177,346


947,049

Increase of restricted cash

(8,668,629)


-

Net cash used in investing activities

(9,089,326)


(8,464,153)








CASH FLOWS FROM FINANCING ACTIVITIES:






Bank repayment

(16,133,794)


(11,076,230)

Bank borrowings

40,334,486


15,823,185

Net cash provided by financing activities

24,200,692


4,746,955








Net increase/(decrease) in cash

366,887


(677,075)








Effect of foreign currency translation

398,912


118,938








Cash at beginning of period

8,479,413


9,037,550

Cash at end of period

$

9,245,212

$

8,479,413








Supplemental disclosures of cash flow information:






Interest paid

1,386,810


1,014,145

Income taxes paid

$

999,271

$

822,923

SOURCE QKL Stores Inc.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

icon3
440k+
Newsrooms &
Influencers
icon1
9k+
Digital Media
Outlets
icon2
270k+
Journalists
Opted In
GET STARTED