omniture

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

2014-04-04 18:30 2356

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.
collection