omniture

QKL Stores Inc. Announces Third Quarter 2015 Financial Results

-- 3Q15 Revenue decreased by 4.1% to $58.6 million from $61.1 million in 3Q14 --
-- 3Q15 Gross Profit decreased by 4.5% to $9.8 million from $10.3 million in 3Q14 --
2015-11-16 19:30 2531

DAQING, China, November 16, 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 third quarter ended September 30, 2015.

Mr. Zhuangyi Wang, Chairman and CEO, said, "Our third quarter results generally met our levels of expectation. The variety, value and freshness of our products continue to resonate with our customers driving sales higher. This store growth was also driven by in-store promotional events such as store anniversary celebrations."

"The environment of retailing business is still challenging mainly due to the rising costs and the emerging e-commerce channel. However, we are still confident on the domestic needs because of the urbanization of the third and fourth tier cities that we will achieve a fundamental improvement in the consumer purchasing power during the process."

"We look forward to the upcoming holiday season as we have a number of exciting marketing initiatives planed. Our balance sheet is healthy with a strong cash position, low level of debt and stable flow of cash from operations. We continue to make progress with our store operations and that can result in greater sales and profits over time."

Third Quarter 2015 Financial Results

Revenue in 3rd quarter decreased by $2.5 million, or 4.1%, to $58.6 million for the three months ended September 30, 2015 from $61.1 million for the three months ended September 30, 2014. 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 (42 stores) sales generated approximately $54.8 million in sales in the third quarter of 2015, a decrease of $4.4 million, or 7.4% compared with $59.2 million in net sales in the third quarter of 2014. New store sales increased, reflecting the opening of 3 new stores since January 1, 2014. These stores generated approximately $3.8 million in sales in the third quarter of 2015. The number of stores including supermarkets/hypermarkets and department stores at September 30, 2015 was 45 versus 47 at September 30, 2014.

Gross profit, or total revenue minus cost of sales, decreased by $0.5 million, or 4.5%, to $9.8 million, or 16.7% of net sales, in the third quarter of 2015 from $10.3 million, or 16.8% of net sales, in the third quarter of 2014. The change in gross profit was primarily attributable to a decrease in net sales of $2.5 million and a decrease in cost of sales of $2.0 million in the third quarter of 2015 compared to the third 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 decreased by $2.5 million, or 19.4%, to $10.5 million, or 18.0% of net sales, in the third quarter of 2015, and $13.1 million, or 21.4% of net sales, in the third quarter of 2014. In specific, labor costs decreased by $0.3 million or 5.2%, to $5.5 million in the third quarter of 2015 from $5.8 million in the third quarter of 2014. Promotion expenses decreased by $0.3 million, or 20.0%, to $1.2 million in the third quarter of 2015 from $1.5 million in the third quarter of 2014. Utilities decreased by $0.2 million, or 11.8%, to $1.5 million in the first quarter of 2015 from $1.7 million in the third quarter of 2014. Preliminary expenses in relation to new store opening was nil and $1.5 million in the third quarter of 2015 and 2014 respectively.

General and administrative expenses decreased by $0.1 million, or 4.0%, to $2.0 million, or 3.3% of net sales, in the third quarter of 2015 from $1.9 million, or 3.3% of net sales, in the third quarter of 2014. There is no significant change to our general and administrative expense.

For the three months ended September 30, 2014, our net loss for the third quarter of 2015 was $3.8 million, or $2.53 per diluted share, from net loss of $5.5 million, or $3.60 per diluted share in the prior year period. The number of shares used in the computation of diluted EPS was 1,522,326 for the third quarter of 2015 and 2014.

Conference Call

The Company will conduct a conference call to discuss its third quarter 2015 results on Monday, November 16, 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



September 30,
2015


December 31,
2014


(Unaudited)



ASSETS






Cash

$

18,789,468


$

9,013,006

Restricted cash


20,506,868



8,623,748

Accounts receivable


936,843



949,211

Inventories


42,851,508



62,605,754

Other receivables


19,565,180



21,375,611

Prepaid expenses


11,232,673



12,114,028

Advances to suppliers


8,524,899



8,653,037

Deferred income tax assets -- current portion


2,828,440



2,839,714

Total current assets


125,235,879



126,174,109

Property, plant and equipment, net


34,335,416



37,843,171

Land use rights, net


637,764



684,375

Deferred income tax assets -- non-current portion


59,570



61,681

Other assets


11,886



11,880

Total assets

$

160,280,515


$

164,775,216

LIABILITIES AND SHAREHOLDERS' EQUITY






Short-term loans

$

70,712,467


$

60,201,757

Accounts payable


35,689,016



37,206,633

Cash card and coupon liabilities


14,489,950



14,539,728

Customer deposits received


1,968,447



2,005,136

Accrued expenses and other payables


22,665,590



23,147,611

Income taxes payable


32,516



241,189

Total current liabilities


145,557,986



137,342,054

Total liabilities


145,557,986



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 September 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 September 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


(102,088,725)



(89,116,190)

Accumulated other comprehensive income


14,720,271



14,458,369

Total shareholders' equity


14,722,529



27,433,162

Total liabilities and shareholders' equity

$

160,280,515


$

164,775,216

QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income



(Unaudited)


(Unaudited)


Three Months
Ended September 30,


Nine Months
Ended September 30,


2015


2014


2015


2014

Net sales

$

58,624,419


$

61,121,016


$

207,615,214


$

198,809,303

Cost of sales


48,825,220



50,855,098



173,493,113



165,124,579

Gross profit


9,799,199



10,265,918



34,122,101



33,684,724













Operating expenses:












Selling expenses


10,523,974



13,062,967



37,361,946



35,800,120

General and administrative expenses


1,940,631



2,022,426



6,492,514



7,219,674

Total operating expenses


12,464,605



15,085,393



43,854,460



43,019,794













Loss from operations


(2,665,406)



(4,819,475)



(9,732,359)



(9,335,070)













Non-operating expense:












Interest income


250,179



241,800



540,008



726,416

Interest expense


(1,432,582)



(891,855)



(3,760,497)



(3,670,486)

Total non-operating expense


(1,182,403)



(650,055)



(3,220,489)



(2,944,070)













Loss before income taxes


(3,847,809)



(5,469,530)



(12,952,848)



(12,279,140)













Income taxes


656



11,357



19,687



21,096













Net loss

$

(3,848,465)


$

(5,480,887)


$

(12,972,535)


$

(12,300,236)













Comprehensive income statement:












Net loss

$

(3,848,465)


$

(5,480,887)


$

(12,972,535)


$

(12,300,236)

Foreign currency translation adjustment


(335,070)



675,064



261,902



(57,107)

Comprehensive loss

$

(4,183,535)


$

(4,805,823)


$

(12,710,633)


$

(12,357,343













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

$

(2.53)


$

(3.60)


$

(8.52)


$

(8.08)

Diluted

$

(2.53)


$

(3.60)


$

(8.52)


$

(8.08)

QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows



(Unaudited)


Nine Months Ended September 30,


2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES:






Net loss

$

(12,972,535)


$

(12,300,236)

Depreciation


3,023,678



5,084,837

Amortization


23,903



24,173

Share-based compensation


-



306,309

Deferred income tax


(88,564)



(8,770)

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






Accounts receivable


(20,739)



233,589

Inventories


18,546,323



16,845,228

Other receivables


1,111,685



2,599,829

Prepaid expenses


481,141



2,916,696

Advances to suppliers


(173,189)



2,829,497

Accounts payable


(251,754)



(1,606,320)

Cash card and coupon liabilities


461,646



(293,403)

Customer deposits received


32,921



212

Accrued expenses and other payables


319,512



211,765

Income taxes payable


(206,596)



32,248

Net cash provided by operating activities


10,287,432



16,875,654







CASH FLOWS FROM INVESTING ACTIVITIES:






Purchases of property, plant and equipment


(742,895)



(3,229,057)

Increase of restricted cash


(12,553,657)



-

Net cash used in investing activities


(13,296,552)



(3,229,057)







CASH FLOWS FROM FINANCING ACTIVITIES:






Repayment of bank borrowings


(71,758,322)



(16,259,555)

Bank loan borrowing


84,716,935



35,771,021

Net cash provided by financing activities


12,958,613



19,511,466







Effect of foreign currency translation


(173,031)



202,404







Net increase in cash


9,949,493



33,360,467

Cash -- beginning of period


9,013,006



9,245,212

Cash -- end of period

$

18,789,468


$

42,605,679







Supplemental disclosures of cash flow information:






Interest paid

$

3,760,497


$

3,670,486

Income taxes paid

$

228,360


$

65,184







To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/qkl-stores-inc-announces-third-quarter-2015-financial-results-300178999.html

Source: QKL Stores Inc.
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