DAQING, China, May 15, 2012 /PRNewswire-Asia/ -- QKL Stores Inc. (the "Company") (Nasdaq: QKLS), a leading regional supermarket chain in Northeastern China, today announced its financial results for the first quarter ended March 31, 2012.
Mr. Zhuangyi Wang, Chairman and CEO, said, "We finished the first quarter operating a total of 53 stores, comprised of 33 supermarkets, 16 hypermarkets and 4 department stores. As our new store opening plan slows for 2012, the new stores are going to open particularly in the second half of the year, we expect our profitability to improve as we benefit from our 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 2012 Financial Results
Revenue in the first quarter of 2012 increased 10.6% to $112.0 million from $101.3 million in the first quarter of 2011. Revenue performance reflected the growth of 39 comparable stores, which are stores that have been open for at least one year before the beginning of the comparison period, or by January 1, 2011, as well as sales from the net opening of 14 new stores since January 1, 2011. Same-store sales were approximately $93.7 million in the first quarter of 2012, representing an increase of 4.6% from $89.6 million in the first quarter of 2011.The 14 new stores opened since January 1, 2011 generated approximately $18.3 million in sales in the first quarter of 2012.
Gross profit increased 5.3% year over year to $19.1 million, compared to $18.1 million in the prior year period. Gross margin for the first quarter of 2012 was 17.0%, compared to 17.9% for the first quarter of 2011. The increase in gross profit was primarily attributable to the increase in net sales over the prior year period.
Operating expenses increased 18.8% to $17.5 million compared to $14.7 million in the prior year period. This was primarily a result of additional salary, rent and utility expenses, the hiring of more employees, and other operating costs related to the Company's increased store count over the past year. Operating income for the first quarter of 2012 decreased to $1.5 million, or 1.4% of sales, from $3.4 million, or 3.3% of sales, in the first quarter of 2011.
First quarter 2012 net income was approximately $0.8 million, or $0.02 per diluted share, compared with $2.6 million, or $0.07 per diluted share, for the same period in 2011.
As of March 31, 2012, the Company had $28.2 million in unrestricted cash with bank loans of $9.5 millions, compared to $41.1 million as of March 31, 2011 with no bank loans.
As of March 31, 2012, the Company operated 53 stores. The Company closed 1 store in the first quarter of 2012. The reason for the store close is due to the expiration of the lease contract.
The number of weighted average shares outstanding used in the computation of diluted EPS was approximately 37.0 million in the first quarter 2012.
Net cash provided by operating activities for the 2012 first quarter was $21.5 million compared to $25.5 million in the prior year period. The decrease in cash provided by operating activities primarily reflects net cash inflow caused by the decrease of inventories, and decrease of other receivables. The decrease of inventories was caused by reducing the inventory on hand after the peak Chinese New Year season. The decrease of other receivables is largely attributable to the recovery of money from vendors.
Conference Call
The Company will conduct a conference call to discuss its first quarter 2012 results on Tuesday, May 15, 2012 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 10014237.
Participant Dial In (Toll Free): 1-800-860-2442
Participant International: 1-412-858-4600
Canadian Dial In (Toll Free): 1-866-605-3852
China (N) Toll Free: 10-800-712-2304
China (S) Toll Free: 10-800-120-2304
Hong Kong Toll Free: 800-962475
About QKL Stores Inc.:
Based in Daqing, China, QKL Stores, Inc. is a leading regional supermarket chain company operating in Northeastern China. 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, 2012 | December 31, 2011 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash | $ | 28,172,749 | $ | 9,037,550 | ||||
Restricted cash | 253 | 253 | ||||||
Accounts receivable | 103,922 | 115,163 | ||||||
Inventories | 41,984,690 | 54,336,501 | ||||||
Other receivables | 8,816,944 | 11,991,134 | ||||||
Prepaid expenses | 4,935,303 | 6,085,379 | ||||||
Advances to suppliers | 7,919,714 | 10,160,552 | ||||||
Deferred income tax assets | 2,687,174 | 2,972,570 | ||||||
Total current assets | 94,620,749 | 94,699,102 | ||||||
Property, plant and equipment, net | 42,495,462 | 43,042,136 | ||||||
Land use rights, net | 745,422 | 748,410 | ||||||
Goodwill | 26,635,125 | 26,346,942 | ||||||
Other assets | 483,353 | 520,559 | ||||||
Total assets | $ | 164,980,111 | $ | 165,357,149 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Short-term loans | $ | 9,486,616 | $ | 10,998,162 | ||||
Accounts payable | 27,901,462 | 28,417,894 | ||||||
Cash card and coupon liabilities | 17,382,802 | 16,024,437 | ||||||
Customer deposits received | 521,969 | 931,604 | ||||||
Accrued expenses and other payables | 13,128,768 | 14,328,656 | ||||||
Income taxes payable | 219,878 | 227,016 | ||||||
Total current liabilities | 68,641,495 | 70,927,769 | ||||||
Total liabilities | 68,641,495 | 70,927,769 | ||||||
Shareholders' equity | ||||||||
Common stock, $0.001 par value per share, authorized 100,000,000 | 31,345 | 31,345 | ||||||
Series A convertible preferred stock, par value $0.01, authorized | 56,945 | 56,945 | ||||||
Additional paid-in capital | 91,805,792 | 91,589,634 | ||||||
Retained earnings - appropriated | 7,282,560 | 7,282,560 | ||||||
Retained earnings | (14,927,815) | (15,758,416) | ||||||
Accumulated other comprehensive income | 12,089,789 | 11,227,312 | ||||||
Total shareholders' equity | 96,338,616 | 94,429,380 | ||||||
Total liabilities and shareholders' equity | $ | 164,980,111 | $ | 165,357,149 | ||||
QKL STORES INC. AND SUBSIDIARIES | |||||||||
Condensed Consolidated Statements of Income | |||||||||
(Unaudited) | |||||||||
Three Months Ended March 31, | |||||||||
2012 | 2011 | ||||||||
Net sales | $ | 112,038,616 | $ | 101,311,096 | |||||
Cost of sales | 92,983,490 | 83,215,616 | |||||||
Gross profit | 19,055,126 | 18,095,480 | |||||||
Operating expenses: | |||||||||
Selling expenses | 15,130,888 | 12,537,203 | |||||||
General and administrative expenses | 2,375,774 | 2,203,617 | |||||||
Total operating expenses | 17,506,662 | 14,740,820 | |||||||
Income from operations | 1,548,464 | 3,354,660 | |||||||
Non-operating income (expense): | |||||||||
Interest income | 26,528 | 289,622 | |||||||
Interest expense | (293,909) | (31,100) | |||||||
Total non-operating income (loss) | (267,381) | 258,522 | |||||||
Income before income taxes | 1,281,083 | 3,613,182 | |||||||
Income taxes | 450,482 | 1,026,054 | |||||||
Net income | 830,601 | 2,587,128 | |||||||
Comprehensive income statement: | |||||||||
Net income | 830,601 | 2,587,128 | |||||||
Foreign currency translation adjustment | 862,477 | 577,630 | |||||||
Comprehensive income | $ | 1,693,078 | $ | 3,164,758 | |||||
Basic earnings per share of common stock | $ | 0.02 | $ | 0.07 | |||||
Diluted earnings per share | $ | 0.02 | $ | 0.07 | |||||
Weighted average shares used in calculating net income per | 31,344,590 | 29,768,444 | |||||||
Weighted average shares used in calculating net income per | 37,039,139 | 37,039,139 | |||||||
QKL STORES INC. AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2012 | 2011 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 830,601 | $ | 2,587,128 | ||||||||
Depreciation | 1,641,431 | 1,299,885 | ||||||||||
Amortization | 7,224 | 7,433 | ||||||||||
Share-based compensation | 216,158 | 216,158 | ||||||||||
Deferred income tax | 304,196 | (93,043) | ||||||||||
Loss on disposal of fixed assets | 6,137 | - | ||||||||||
Adjustments to reconcile net income to net cash provided by operating | ||||||||||||
Accounts receivable | 11,978 | (557,061) | ||||||||||
Inventories | 12,704,657 | 8,397,106 | ||||||||||
Other receivables | 3,504,787 | 11,474,705 | ||||||||||
Prepaid expenses | 1,229,951 | (1,472,177) | ||||||||||
Advances to suppliers | 2,306,768 | (281,833) | ||||||||||
Accounts payable | (696,663) | (225,817) | ||||||||||
Cash card and coupon liabilities | 1,257,931 | 2,646,960 | ||||||||||
Customer deposits received | (415,828) | (455,801) | ||||||||||
Accrued expenses and other payables | (1,398,449) | 1,980,840 | ||||||||||
Income taxes payable | (8,580) | 19,291 | ||||||||||
Net cash provided by operating activities | 21,502,299 | 25,543,774 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Purchases of property, plant and equipment | (827,585) | (1,942,180) | ||||||||||
Decrease of restricted cash | - | 20,974 | ||||||||||
Net cash used in investing activities | (827,585) | (1,921,206) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Bank loan repayment | (1,581,103) | - | ||||||||||
Net cash used in financing activities | (1,581,103) | - | ||||||||||
Effect of foreign currency translation | 41,588 | 14,422 | ||||||||||
Net increase in cash | 19,135,199 | 23,636,990 | ||||||||||
Cash - beginning of period | 9,037,550 | 17,460,034 | ||||||||||
Cash - end of period | $ | 28,172,749 | $ | 41,097,024 | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Interest paid | $ | 293,909 | $ | 31,100 | ||||||||
Income taxes paid | $ | 459,062 | $ | 991,754 | ||||||||
