omniture

QKL Stores Inc. Announces Second Quarter 2015 Financial Results

-- 2Q15Revenue increased by 9.2% to $56.4 million from $51.7 million in 2Q14 --
-- 2Q15 Gross Profit decreased by 4.3% to $9.1 million from $8.7 million in 2Q14 --
2015-08-14 18:00 3637

DAQING, China, August 14, 2015 /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 second quarter ended June 30, 2015.

Mr. Zhuangyi Wang, Chairman and CEO, said, "In the second quarter, we were more active with the level of promotional activities among our existing stores opened at least one year in order to strengthen our competitive position. We plan to slow down the pace of our new store openings. Currently, we expect to open two new supermarket 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."

"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 the second half of the year and believe we'll see an improvement in operating expenses and net result from the current quarter."

Second Quarter 2015 Financial Results

Net sales increased by $4.8million, or 9.2%, to $56.4 million for the three months ended June 30, 2015 from $51.7 million for the three months ended June 30, 2014. The change in net sales was primarily attributable to the following: Same store sales represents sales from stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2014. Same store (41 stores) sales generated approximately $49.1 million in sales in the second quarter of 2015, a decrease of $0.8 million, or 1.6%, compared with $49.9 million in net sales in the second quarter of 2014. New store sales increased, reflecting the opening of 4 new stores since January 1, 2014. These stores generated approximately $4.4 million in sales in the second quarter of 2015. The number of stores including supermarkets/hypermarkets and department stores at June 30, 2015 was 45 versus 46 at June 30, 2014.

Gross profit, or total revenue minus cost of sales, increased by $0.4 million, or 4.3%, to $9.1 million, or 16.1% of net sales, in the second quarter of 2015 from $8.7 million, or 16.8% of net sales, in the second quarter of 2014. The change in gross profit was primarily attributable to a increase in net sales of $4.8million and a increase in cost of sales of $4.4 million in the second quarter of 2015 compared to the second quarter of 2014.The decrease in gross profit relative to net sales was due to competitions arising from the increasing challenge from the online shopping that have significant pricing pressure on our selling of high margin products.

Selling expenses increased by $1.0 million, or 11.1%, to $10.5 million, or 18.6% of net sales, in the second quarter of 2015, and$9.5 million, or 18.3% of net sales, in the second quarter of 2014. In specific, labor costs increased by $0.4 million or 7.3%, to $5.9 million in the second quarter of 2015 from $5.5 million in the second quarter of 2014. Promotion expenses increased by $0.3 million, or37.5%, to $1.1 million in the second quarter of 2015 from $0.8 million in the second quarter of 2014. Utilities increased by $0.2 million, or 13.3%, to $1.7 million in the first quarter of 2015 from $1.5 million in the first quarter of 2014.

General and administrative expenses increased by $78,343, or 4.0%, to $2.0 million, or 3.6% of net sales, in the second quarter of 2015 from $2.0 million, or 3.8% of net sales, in the second quarter of 2014.There is no significant change to our general and administrative expense.

Our net loss for the second quarter of 2015 was $4.5 million, or $2.98 per diluted share, from net loss of $3.8 million, or $2.47 per diluted share in the prior year period. The number of shares used in the computation of diluted EPS was1,522,326 for the second quarter of 2015 and 2014.

Conference Call

The Company will conduct a conference call to discuss its first quarter 2015 results on Friday, May 15, 2015 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 10046673.

Participant Dial In (Toll Free): 1-877-870-4263
Participant International: 1-412-317-0790
Canadian Dial In (Toll Free): 1-855-669-9657
China (N) Toll Free: 4001-201203
China (S) Toll Free: 4001-201203
Hong Kong Toll Free: 800-905945

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

Condensed Consolidated Balance Sheets






June 30,
2015



December 31,
2014




(Unaudited)





ASSETS









Cash


$

$36,722,485



$

9,013,006


Restricted cash



21,362,877




8,623,748


Accounts receivable



900,778




949,211


Inventories



41,149,824




62,605,754


Other receivables



19,431,891




21,375,611


Prepaid expenses



11,205,607




12,114,028


Advances to suppliers



9,039,376




8,653,037


Deferred income tax assets - current portion



2,835,577




2,839,714


Total current assets



142,648,415




126,174,109


Property, plant and equipment, net



37,379,217




37,843,171


Land use rights, net



671,140




684,375


Deferred income tax assets - non-current portion



62,057




61,681


Other assets



12,021




11,880


Total assets


$

180,772,850



$

164,775,216


LIABILITIES AND SHAREHOLDERS' EQUITY









Short-term loans


$

85,614,196



$

60,201,757


Accounts payable



36,649,329




37,206,633


Cash card and coupon liabilities



14,268,133




14,539,728


Customer deposits received



1,940,154




2,005,136


Accrued expenses and other payables



23,297,704




23,147,611


Income taxes payable



97,270




241,189


Total current liabilities



161,866,786




137,342,054


Total liabilities



161,866,786




137,342,054











Shareholders' equity









Common stock, $0.001 par value per share, authorized 100,000,000 shares, issued
and outstanding 1,522,326 shares at June 30, 2015 and December 31, 2014



1,522




1,522


Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares,
issued and outstanding 529,412 shares at June 30, 2015 and December 31, 2014



5,294




5,294


Additional paid-in capital



93,746,014




93,746,014


Retained earnings - appropriated



8,338,153




8,338,153


Retained earnings



(98,240,260)




(89,116,190)


Accumulated other comprehensive income



15,055,341




14,458,369


Total shareholders' equity



18,906,064




27,433,162


Total liabilities and shareholders' equity


$

180,772,850



$

164,775,216


QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income




(Unaudited)



(Unaudited)




Three Months
Ended June 30,



Six Months
Ended June 30,




2015



2014



2015



2014


Net sales


$

56,433,109



$

51,655,611



$

148,990,795



$

137,688,287


Cost of sales



47,370,425




42,968,964




124,667,893




114,269,481


Gross profit



9,062,684




8,686,647




24,322,902




23,418,806



















Operating expenses:

















Selling expenses



10,506,151




9,456,970




26,837,972




22,737,153


General and administrative expenses



2,042,181




1,963,838




4,551,883




5,197,248


Total operating expenses



12,548,332




11,420,808




31,389,855




27,934,401



















Loss from operations



(3,485,648)




(2,734,161)




(7,066,953)




(4,515,595)



















Non-operating expense:

















Interest income



203,388




254,517




289,829




484,616


Interest expense



(1,247,701)




(1,279,388)




(2,327,915)




(2,778,631)


Total non-operating expense



(1,044,313)




(1,024,871)




(2,038,086)




(2,294,015)



















Loss before income taxes



(4,529,961)




(3,759,032)




(9,105,039)




(6,809,610)



















Income taxes



10,936




3,867




19,031




9,739



















Net loss


$

(4,540,897)



$

(3,762,899)



$

(9,124,070)



$

(6,819,349)



















Comprehensive income statement:

















Net loss


$

(4,540,897)



$

(3,762,899)



$

(9,124,070)



$

(6,819,349)


Foreign currency translation adjustment



49,781




21,002




596,972




(732,171)


Comprehensive loss


$

(4,491,116)



$

(3,741,897)



$

(8,527,098)



$

(7,551,520)



















Weighted average number of shares outstanding:

















Basic



1,522,326




1,522,326




1,522,326




1,522,326


Diluted



1,522,326




1,522,326




1,522,326




1,522,326



















Losses per share:

















Basic


$

(2.98)



$

(2.47)



$

(5.99)



$

(4.48)


Diluted


$

(2.98)



$

(2.47)



$

(5.99)



$

(4.48)


QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows






(Unaudited)




Six Months Ended June 30,




2015



2014


CASH FLOWS FROM OPERATING ACTIVITIES:









Net loss


$

(9,124,070)



$

(6,819,349)


Depreciation



2,230,013




3,279,750


Amortization



14,355




14,708


Share-based compensation



-




204,029


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









Accounts receivable



54,067




222,985


Inventories



21,277,993




16,863,267


Other receivables



2,068,199




(314,995)


Prepaid expenses



979,528




5,042,852


Advances to suppliers



(332,742)




2,847,162


Accounts payable



(781,752)




(1,367,629)


Cash card and coupon liabilities



(359,160)




(293,696)


Customer deposits received



(76,983)




73,164


Accrued expenses and other payables



17,316




447,597


Income taxes payable



(144,993)




(33,029)


Net cash provided by operating activities



15,821,771




20,166,816











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchases of property, plant and equipment



(337,492)




(1,603,149)


Increase of restricted cash



(12,652,235)




-


Net cash used in investing activities



(12,989,727)




(1,603,149)











CASH FLOWS FROM FINANCING ACTIVITIES:









Repayment of bank borrowings



(35,916,022)




(16,275,750)


Bank loan borrowing



60,893,982




35,806,650


Net cash provided by financing activities



24,977,960




19,530,900











Effect of foreign currency translation



(100,523)




(172,551)











Net increase in cash



27,810,004




38,094,567


Cash - beginning of period



9,013,006




9,245,212


Cash - end of period


$

36,722,487



$

47,167,228











Supplemental disclosures of cash flow information:









Interest paid


$

2,327,915



$

2,789,480


Income taxes paid


$

260,494



$

23,252











To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/qkl-stores-inc-announces-second-quarter-2015-financial-results-300128655.html

Source: QKL Stores Inc.
Keywords: Retail Supermarkets
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