QKL Stores Inc. Announces Third Quarter 2013 Financial Results

DAQING, China, Nov. 14, 2013 /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 third quarter ended September 30, 2013.

Mr. Zhuangyi Wang, Chairman and CEO, said, "Our third quarter results generally met our levels of expectation. The variety, value and freshness of our products continue to resonate with our customers driving sales higher. This store growth was also driven by in-store promotional events such as store anniversary celebrations.

"We plan to open one additional store before Chinese New Year. The new stores we will open in the future will be located in Daqing City where we have stronger relationships with local vendors and the cost of goods is slightly lower than the other cities in which we operate." 

"The environment of retailing business is still challenging mainly due to the rising costs and the emerging e-commerce channel. However, we are still confident on the domestic needs because of the urbanization of the third and fourth tier cities that we will achieve a fundamental improvement in the consumer purchasing power during the process. For the remaining one quarter of 2013, we believe our gross margin will remain stable in the 17.0%-17.5% range"

"We look forward to the upcoming holiday season as we have a number of exciting marketing initiatives planed. Our balance sheet is healthy with a strong cash position, low level of debt and stable flow of cash from operations. We continue to make progress with our store operations and that can result in greater sales and profits over time."

Third Quarter 2013 Financial Results

Revenue in the third quarter of 2013 decreased by $25.1 million, or 29.8%, to $59.2 million from $84.3 million for during the same quarter of 2012. Same store sales represent sales from stores that were opened for at least one year before the beginning of the comparison period, or by July 1, 2012. Same store (44 stores) sales generated approximately $58.8 million sales in the third quarter of 2013, a decrease of $7.2 million, or 12.2% compared with $67.0 million net sales in the third quarter of 2012. New store sales increased, reflecting the net opening of one new store since July 1, 2012. The new stores generated approximately $0.4 million sales in the third quarter of 2013.

Gross profit decreased by 28.4% year-over-year to $10.1 million, compared to $14.2 million in the prior year period. The decrease in gross margin was primarily attributable to net sales decrease by 25.1 million in the third quarter of 2013. 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 decreased by $3.3 million, or 24.8%, to $10.0 million, or 16.9% of net sales, in the third quarter of 2013 from $13.3 million, or 15.8% of net sales, in the third quarter of 2012. The change in selling expense was mainly due to decrease in labor costs resulting from a decrease in the number of store employees and a decrease in rent expense in the three months ended September 30, 2013 compared to the same period in 2012.

General and administrative expenses decreased by $20,891, or 1.0%, to $2.1 million, or 3.5% of net sales, in the third quarter of 2013 from $2.1 million, or 2.5% of net sales, in the third quarter of 2012. There is no significant change to our general and administrative expense.

For the three months ended September 30, 2013, our net loss was $1.7 million, or $(1.112) per diluted share, compared to net loss of $1.1 million, or ($0.842) per diluted share, for the three months ended September 30, 2012. 

As of September 30, 2013, the Company had $29.6 million in unrestricted cash and bank loans of $11.4 million, compared to $27.6 million as of September 30, 2012 with bank loans of $7.9 million.

Conference Call

Management will host a conference call at 8:30 am ET on Thursday, November 14th, 2013. To participate, please dial one of the local access numbers, listed below. The conference call identification number is 10037060.

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

SOURCE QKL Stores Inc.

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