-- 4Q10 Revenue Increased 17.3% to $85.8 million from $73.2 million in
4Q09 --
-- 4Q10 Gross Profit Increased 18.6% to $15.4 million from $13.0 million
in 4Q09 --
DAQING, China, March 31, 2011 /PRNewswire-Asia/ -- QKL Stores Inc. (the
"Company") (Nasdaq: QKLS), a leading regional supermarket chain in Northeastern
China, today announced its financial results for the quarter ended December 31,
2010.
Mr. Zhuangyi Wang, Chairman and CEO, said, "We were pleased with our fourth
quarter results which showed solid sequential improvement over our 2010 third
quarter. Our gross profit performance exceeded 18% as we benefited from healthy
same store sales, the larger store format of many of our stores and our new
distribution center. We finished the year operating a total of 43 market
locations, comprised of 29 supermarkets, 11 hypermarkets and 3 department
stores."
"As we enter 2011, we believe the northeast China region will continue to
benefit from solid economic growth, increased urbanization and growing levels of
disposable income which bodes well for our existing retail stores and new stores
we plan on opening. We have already opened 6 new stores in the first quarter and
the plan to add 12 total new store locations for an aggregate total of
approximately 70,000 square meters of space in 2011. We believe our full year
gross margin trends can gradually increase as we benefit from greater sales of
non-food items, a larger size store format, bulk buying power, greater private
label sales and the opening of our second distribution center. We also will
continue to focus on minimizing our expenses to generate additional profit
growth opportunities."
FourthQuarter 2010FinancialResults
Revenuein the fourth quarter of 2010 increased 17.3% to $85.8 million from $73.2
million in the fourth quarter of 2009. Revenue performance reflected the growth
of 31 comparable stores, which are stores that have been open for at least one
year before the beginning of the comparison period, or by October 1, 2009, as
well as sales from the opening of 12 new stores since October 1, 2009.
Same-store sales were approximately $73.8 million in the fourth quarter of 2010,
an increase of 8.7% from $67.4 million in the fourth quarter of 2009.The 12 new
stores opened since October 1, 2009 generated approximately $12.0 million in the
fourth quarter of 2010.
Gross profit increased 18.6% year over year to $15.4 million, compared to $13.0
million in the prior year period. Gross profit for the fourth quarter of 2010
was 18.0%, compared to 17.8% for the fourth quarter of 2009. The increase in
gross profit was primarily attributable to the increase in net sales over the
prior year period as well as the new distribution center which enabled the
Company to purchase larger orders from vendors at lower prices and thus reduces
cost of goods sold.
Operating expenses increased 31.3% to $12.7 million compared to $9.7 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 was $2.8 million, or 3.2% of sales, from $3.4 million, or 4.6%
of total sales, in the fourth quarter of 2009 and $1.4 million, or 2.1% of sales
in the third quarter of 2010.
Fourth quarter 2010 net income was approximately $2.4 million, or $0.06 per
diluted share, compared with $12.1 million, or $0.33 per diluted share, for the
same period in 2009. Excluding changes in the fair value of warrants, adjusted
net income for the three months ended December 31, 2010 was $2.4 million, or
$0.06 per diluted share, compared to $2.6 million, or $0.07 per diluted share,
in the period prior year.
As of December 31, 2010, the Company had $17.5 million in unrestricted cash,
compared to $45.9 million as of December 31, 2009 and no debt or bank loans.
As of December 31, 2010, the Company operated 43 stores totaling 205,976 sq.
meters compared to 36 stores totaling 161,215 sq. meters in the prior year
period. The Company opened 5 new store locations in the fourth quarter of 2010.
Full Year 2010 Financial Results
Net sales increased by $50.8 million, or 20.5%, to $298.4 million for fiscal
2010 from $247.6 million for fiscal 2009. 27 comparable stores opened for at
least one year before the beginning of the comparison period, or by January 1,
2009, generated approximately $227.5 million in sales in 2010, a 9.7% increase
compared to $207.4 million in sales in 2009. New store sales increased,
reflecting the opening of 16 new stores since January 1, 2009. Nine stores
opened in 2010 generating approximately $14.7 million for fiscal 2010, and seven
stores opened in 2009 generated $51.3 million in fiscal 2010.
Gross profit increased by $9.3 million, or 21.2%, to $52.9 million, or 17.7% of
net sales, in fiscal 2010 from $43.6 million, or 17.6% of net sales, in fiscal
2009. The change in gross profit was primarily attributable to the increase in
full year net sales
Selling expenses increased by $8.0 million, or 33.0%, to $32.3 million, or 10.8%
of net sales, in fiscal 2010 from $24.3 million, or 9.8% of net sales, in fiscal
2009. The change in selling expense was mainly due to increase in labor costs,
depreciation, rent expense, and utilities and other operating costs for fiscal
2010 compared with fiscal 2009 primarily due to support of an increase in store
count. In particular, labor costs increased by $2.8 million or 35.5%, to $10.8
million in fiscal 2010 from $8.0 million in fiscal 2009. Depreciation increased
by $0.9 million, or 35.8% in fiscal 2010, to $3.4 million from $2.5 million in
fiscal 2009. Rent expenses increased by $2.9 million, or 255.3%, to $4.0 million
in fiscal 2010 from $1.1 million in fiscal 2009. Utilities increased by $1.0
million, or 30.3%, to $4.4 million in fiscal 2010 from $3.4 million in fiscal
2009.
General and administrative expenses increased by $3.4 million to $8.2 million,
or 2.7% of net sales, in fiscal 2010 from $4.8 million, or 1.9% of net sales, in
fiscal 2009. The increase was mainly due to the fact that the Company continued
to strengthen its work force by hiring new employees, training and providing
higher compensation to managerial staff.
Net Income was $17.4 million, or $0.44 per diluted share, in fiscal 2010
compared to a net loss of $24.6 million, or ($1.13) per diluted share, in fiscal
2009. Excluding changes in the fair value of warrants, adjusted net income for
fiscal 2010 decreased 11.3% to $9.6 million, or $0.24 per diluted share, from
$10.8 million, or $0.34 per diluted share for fiscal 2009.
The number of weighted average shares outstanding used in the computation of
diluted EPS increased 80.0% to 39.4 million in fiscal 2010 from 21.9 million in
fiscal 2009. Excluding changes in the fair value of warrants, the number of
weighted average shares outstanding used in the computation of diluted EPS
increased 23.5% to 39.4 million shares in fiscal 2010 from 31.9 million shares
in fiscal 2009.
Conference Call
The Company will conduct a conference call to discuss its fourth quarter 2010
results on Thursday, March 31, 2011 at 8:30 am ET. Listeners may access the call
by dialing #1-719-457-2605. To listen to the live webcast of the event, please
go to http://www.viavid.net. Listeners may access the call replay, which will be
available through April 7th, by dialing #1-858-384-5517; conference ID: 5288532.
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
Contact Information
QKL Stores, Inc. ICR, Inc.
In China: In U.S.:
Mike Li, Investor Relations Bill Zima
+86-459-460-7987 +1-203-682-8233
(Financial TablesFollow)
QKL STORES INC. AND SUBSIDIARIES
Income Statements
Years Ended
December 31,
2010 2009
---- ----
Net sales $298,399,394 $247,594,272
Cost of sales 245,548,576 203,994,809
Gross profit 52,850,818 43,599,463
---------- ----------
Operating expenses:
Selling expenses 32,348,721 24,324,848
General and administrative
expenses 8,151,742 4,802,262
Total operating expenses 40,500,463 29,127,110
---------- ----------
Income from operations 12,350,355 14,472,353
Non-operating
income(expense):
Other income (expenses) - (14,253)
(Increase) decrease in
fair value of warrants 7,801,649 (35,492,017)
Interest income 670,245 222,007
Interest expense (10,469) (23,734)
Total non-operating
income (loss) 8,461,425 (35,307,997)
Income (loss) before
income tax 20,811,780 (20,835,644)
Income taxes 3,381,216 3,807,794
Net income (loss) $17,430,564 $(24,643,438)
============
Weighted average number of
shares outstanding:
Basic 29,670,468 21,885,423
Diluted 39,411,282 21,885,423
========== ==========
Earnings (loss) per share
Basic $0.59 $(1.13)
Diluted $0.44 $(1.13)
===== ======
QKL STORES INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December December
31, 2010 31, 2009
-------- --------
ASSETS
Cash $17,460,034 $45,912,798
Restricted cash 77,205 181,836
Accounts receivable 167,509 283,929
Inventories 44,467,265 24,691,156
Other receivables 28,236,397 13,980,572
Prepaid expenses 5,088,825 2,993,191
Advances to
suppliers 3,740,327 2,965,139
Deferred income tax
assets 508,617 417,788
-------
Total current assets 99,746,179 91,426,409
Property, plant
equipment, net 24,792,149 29,402,630
Land use rights, net 748,533 753,226
Goodwill 43,863,929 19,280,509
Other assets 467,927 408,391
Total assets $169,618,717 $141,271,165
============ ============
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Accounts payable 38,944,917 29,244,923
Cash card and coupon
liabilities 10,814,546 7,721,630
Customer deposits
received 1,495,059 3,862,890
Accrued expenses and
other payables 9,883,282 6,656,089
Income taxes payable 2,365,931 1,154,229
Total current
liabilities 63,503,735 48,639,761
Warrant liabilities - 44,304,034
--- ----------
Total liabilities 63,503,735 92,943,795
----------
Commitments and
contingencies - -
Stockholders' equity
Common stock, $.001
par value per
share, authorized
100,000,000,
shares, issued and
outstanding
29,743,811 and
29,475,983 at
December 31, 2010
and December 31,
2009, respectively 29,744 29,476
Series A convertible
preferred stock,
par value $0.01,
10,000,000 shares
authorized,
7,295,382 and
7,548,346 shares
outstanding at
December 31, 2010
and 2009,
respectively 72,953 75,483
Additional paid-in
capital 90,710,619 53,191,217
Retained earnings -
appropriated 6,012,675 4,913,072
Retained earnings
(accumulated
deficit) 2,094,850 (14,236,111)
Accumulated other
comprehensive
income 7,194,141 4,354,233
--------- ---------
Total stockholders'
equity 106,114,982 48,327,370
----------- ----------
Total liabilities
and stockholders'
equity $169,618,717 $141,271,165
============ ============
QKL STORES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended
December 31,
2010 2009
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $17,430,564 $(24,643,438)
Depreciation-property,
plant and equipment 4,858,011 2,721,636
Amortization 28,294 27,967
Deferred income tax (77,850) (416,944)
Loss on disposal of
property, plant and
equipment 180,304 36,938
Share-based compensation 1,014,755 -
Change in fair value of
warrants (7,801,649) 35,492,017
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Accounts receivable 125,240 512,692
Inventories (19,009,023) (10,047,537)
Other receivables (13,821,470) (9,749,527)
Prepaid expenses (2,038,694) (327,811)
Advances to suppliers (2,043,610) 1,686,988
Accounts payable 8,791,436 7,829,738
Cash card and coupon
liabilities 2,853,026 3,834,412
Customer deposits received (2,487,840) 944,028
Accrued expenses and other
payables 1,748,832 3,069,863
Income taxes payable 1,175,844 (104,692)
--------- --------
Net cash provided by
operating activities (9,073,830) 10,866,330
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property,
plant and equipment (8,618,288) (19,566,327)
Acquisition of business,
net (23,984,428) -
Refund of office building
purchase 11,343,373 -
Sales proceeds of fixed
assets disposal 11,533 -
Decrease of restricted cash 104,631 111,313
------- -------
Net cash used in investing
activities (21,143,179) (19,455,014)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
Common stock - 37,406,389
Repayment of bank loan - (2,195,872)
--- ----------
Net cash provided by
financing activities - 35,210,517
--- ----------
Net increase in cash (30,217,009) 26,621,833
Effect of foreign currency
translation 1,764,245 5,944
Cash at beginning of period 45,912,798 19,285,021
---------- ----------
Cash at end of period $17,460,034 $ 45,912,798
=========== ==========
Supplemental disclosures of
cash flow information:
Interest received 206,003 222,007
Interest paid 10,469 23,734
Income taxes paid $2,260,343 $ 4,120,045
========== =========
QKL STORES INC. AND SUBSIDIARIES
Income Statements
Three Three
Months Months
ended ended
December December
31, 2010 31, 2009
-------- --------
Net sales $85,823,938 $73,184,213
Cost of sales 70,388,146 60,171,683
Gross profit 15,435,792 13,012,530
---------- ----------
Operating expenses:
Selling expenses 10,547,065 8,068,950
General and
administrative
expenses 2,129,623 1,585,004
Total operating
expenses 12,676,688 9,653,954
---------- ---------
Income from operations 2,759,104 3,358,576
Non-operating
income(expense):
Other income
(expenses) - (14,253)
(Increase) decrease in
fair value of
warrants - 9,558,621
Interest income 160,030 33,559
Interest expense (53) (2,934)
Total non-operating
income 159,977 9,574,994
Income before income
tax 2,919,081 12,933,569
Income taxes 515,602 821,195
Net income $2,403,479 $12,112,374
===========
Weighted average
number of shares
outstanding:
Basic 29,738,659 24,858,989
Diluted 37,694,475 36,254,460
========== ==========
Earnings (loss) per
share
Basic $0.08 $0.49
Diluted $0.06 $0.33
===== =====
Source: QKL Stores Inc.
