omniture

QKL Stores Inc. Announces Fourth Quarter and Full Year 2015 Financial Results

2016-04-14 18:30 2382

DAQING, China, April 14, 2016 /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, 2015.

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 2015 and believe we'll see an improvement in operating expenses and profit growth in coming quarters.

"In 2015, we closed three stores; as of December 31, 2015, we operated 25 supermarkets, 16 hypermarkets, 4 department stores and 5 distribution centers situated in Daqing, Harbin Changchun and Jiamusi, respectively.

"As we advance into 2015, we expect to open one new supermarket 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 2015 Financial Results

Revenue in the fourth quarter of 2015 decreased by 17.7% to $62.4 million from $75.8 million in the fourth quarter of 2014. Comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by October 1, 2014. Those 40 stores generated approximately $55.0 million in sales in the fourth quarter of 2015, representing a decrease of $10.1 million, or 15.6% compared with $65.1 million in sales in fiscal 2014. New store sales increased, reflecting the opening of 5 new stores since October 1, 2014. These stores generated approximately $7.4 million in sales in the fiscal 2015.

Gross profit decreased by 17.3% year over year to $10.5 million, compared to $12.7 million in the prior year period. Gross profit as a percentage of revenue for the fourth quarter of 2015 was 16.9%, compared to 16.8% for the fourth quarter of 2014. The change in gross profit was primarily attributable to net sales decreased by $13.4 million in fiscal 2015 compared to fiscal 2014.

Operating expenses increased by 24.4% to $30.6 million compared to $24.6 million in the prior year period. The change in operating expenses was mainly due to the increase in expenses, including salaries, utility and advertising in fiscal 2015. The increase was also due to a $5.0 million of long-lived asset impairment charges during fiscal 2015.

We had a net loss of $18.3 million in the fourth quarter of 2015 compared with net loss of $14.7 million in the fourth quarter of 2014.

Full Year 2015 Financial Results

Net sales decreased by $4.5 million, or 1.6%, to $270.1 million for fiscal 2015 from $274.6 million for fiscal 2014. Comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2014. Those 40 stores generated approximately $235.3 million sales in fiscal 2015, a decrease of $11.4 million, or 4.6% compared with $246.7 million sales in fiscal 2014. New store sales increased, reflecting the opening of 5 new stores since January 1, 2014. These stores generated approximately $31.8 million in sales in the fiscal 2015. The number of stores including supermarkets/hypermarkets and department stores at fiscal 2015 was 45 versus 48 at fiscal 2014.

Gross profit, or total revenue minus cost of sales, was decreased by $0.7 million, or 1.7%, to $45.7 million, or 16.9% of net sales, in fiscal 2015 from $46.4 million, or 16.9% of net sales, in fiscal 2014. The change in gross profit was primarily attributable to net sales decreasing by $4.5 million in fiscal 2015 compared to fiscal 2014.

Operating expenses increased by $2.8 million, or 4.8%, to $61.6 million, or 22.8% of net sales, in fiscal 2015 from $58.7 million, or 21.4% of net sales, in fiscal 2014. The change in operating expenses was mainly due to the increase in expenses, including salaries, utility and advertising in fiscal 2015. The increase was also due to $5.0 million of long-lived asset impairment charges during fiscal 2015.

We had a net loss of $31.2 million in fiscal 2015 compared with net loss of $27.0 million in fiscal 2014. The number of shares used in the computation of diluted EPS was 1,522,326 shares in fiscal 2015 and 2014.

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, 2015


December 31, 2014






ASSETS





Cash


$

9,059,312


$

9,013,006

Restricted cash



8,164,524



8,623,748

Short term investment



107,830



-

Accounts receivable



667,842



949,211

Inventories



57,911,057



62,605,754

Other receivables



19,119,889



21,375,611

Prepaid expenses



9,388,381



12,114,028

Advances to suppliers



10,959,426



8,653,037

Deferred income tax assets - current portion



2,058,207



2,839,714








Total current assets



117,436,468



126,174,109

Property, plant equipment, net



23,658,581



37,843,171

Land use rights, net



619,318



684,375

Deferred income tax assets - non-current portion



1,253,286



61,681

Other assets



6,224



11,880








Total assets


$

142,973,877


$

164,775,216








LIABILITIES AND STOCKHOLDERS' EQUITY







Short term bank loans



69,319,285



60,201,757

Accounts payable



41,062,255



37,206,633

Cash card and coupon liabilities



13,556,213



14,539,728

Customer deposits received



2,866,632



2,005,136

Accrued expenses and other payables



21,636,314



23,147,611

Income taxes payable



43,364



241,189








Total current liabilities



148,484,063



137,342,054

Warrant liabilities



-



-








Total liabilities



148,484,063



137,342,054








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 1,522,326 shares at December 31, 2015 and December 31, 2014 respectively



1,522



1,522

Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares, issued and outstanding 529,412 and 529,412 shares at December 31, 2015 and December 31, 2014



5,294



5,294

Additional paid-in capital



93,746,014



93,746,014

Retained earnings - appropriated



8,342,969



8,338,153

Retained earnings



(120,345,590)



(89,116,190)

Accumulated other comprehensive income



12,739,605



14,458,369








Total shareholders' equity



(5,510,186)



27,433,162








Total liabilities and shareholders' equity


$

142,973,877


$

164,775,216

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Operations






Years Ended December 31,



2015


2014






Net sales


$

270,064,086


$

274,636,920

Cost of sales



224,410,425



228,215,577

Gross profit



45,653,661



46,421,343








Operating expenses:







Selling expenses



61,552,981



58,724,799

General and administrative expenses



11,933,688



8,879,070

Total operating expenses



73,486,669



67,603,869








Loss from operations



(27,833,008)



(21,182,526)















Non-operating income(expense):







Interest income



564,320



622,988

Interest expense



(4,714,296)



(4,436,526)

Total non-operating income



(4,149,976)



(3,813,538)








Loss before income tax



(31,982,984)



(24,996,064)








Income taxes



(758,400)



1,965,765








Net loss


$

(31,224,584)


$

(26,961,829)

Comprehensive loss statement:














Net loss



(31,224,584)



(26,961,829)

Foreign currency translation adjustment



(1,718,764)



501,580








Comprehensive loss


$

(32,943,348)


$

(26,460,249)

*Basic earnings per share of common stock


$

(20.51)


$

(17.71)

*Diluted earnings per share


$

(20.51)


$

(17.71)








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



1,522,326



1,522,326

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



1,522,326



1,522,326

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows






Years Ended December 31,



2015


2014






CASH FLOWS FROM OPERATING ACTIVITIES:





Net loss


$

(31,224,584)


$

(26,961,829)

Depreciation-property, plant and equipment



4,079,764



4,942,830

Amortization



29,820



30,223

Deferred income tax



(588,435)



(60,393)

Loss on disposal of property, plant and equipment



3,740,273



1,205,657

Share-based compensation



-



408,057

Provision/(reversal) on PPE, inventory, other receivables and sales return



5,164,943



(378,576)

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







Accounts receivable



240,563



(394,389)

Inventories



1,555,062



1,761,003

Other receivables



880,704



880,698

Prepaid expenses



2,168,357



(2,250,285)

Advances to suppliers



(2,883,981)



(871,150)

Accounts payable



6,083,334



1,552,356

Cash card and coupon liabilities



(218,068)



(3,829,348)

Customer deposits received



1,009,143



1,026,003

Accrued expenses and other payables



(1,894,818)



5,209,616

Income taxes payable



(192,789)



1,972,000

Net cash used in operating activities



(12,050,712)



(15,757,527)








CASH FLOWS FROM INVESTING ACTIVITIES:







Purchases of short term investment



(112,381)



-

Purchases of property, plant and equipment



(459,504)



(4,230,820)

Sales proceeds of fixed assets disposal



322,444



277,290

Net cash used in investing activities



(249,441)



(3,953,530)








CASH FLOWS FROM FINANCING ACTIVITIES:







Bank repayment



(59,401,490)



(40,678,849)

Bank borrowings



72,245,055



60,204,696

Net cash provided by financing activities



12,843,565



19,525,847








Net increase/(decrease) in cash



543,412



(185,210)








Effect of foreign currency translation



(497,106)



(46,996)








Cash at beginning of period



9,013,006



9,245,212

Cash at end of period


$

9,059,312


$

9,013,006








Supplemental disclosures of cash flow information:







Interest paid



4,714,296



4,436,526

Income taxes (received)


$

(27,860)


$

(45,196)

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Source: QKL Stores Inc.
Keywords: Retail Supermarkets