-- 3Q09 Revenues Increased 80.7% to $57.1 Million --

-- 3Q09 Gross Profit Increased 34.3% to $10.4 Million --

-- Quarterly Same Store Sales Increase 17.1% --

-- Company Opened One New Supermarket in 3Q09 --

DAQING, China, Nov. 16 /PRNewswire-Asia/ -- QKL Stores Inc. (the "Company") (Nasdaq: QKLS), a leading regional supermarket chain in Northeast China, today announced its financial results for the third quarter ended September 30, 2009.

Third Quarter 2009 Financial Results

Third quarter revenue increased 80.7% to $57.1 million compared to $31.6 million in the third quarter of 2008. Retail sales revenue, which consists of revenue derived from 31 supermarkets, represented $55.8 million, or 97.7% of the quarter's total revenue, compared to $30.6 million, or 96.8% of revenue, in the prior year period. The retail revenue was primarily driven by 12 new stores opened since July 2008 as well as the steady growth of the 19 retail stores that have been open for more than one year.

Third quarter sales from the 19 stores open at least one year as of July 1, 2009 increased 17.1% to $30.3 million during the third quarter of 2009 compared to $25.9 million in the third quarter of 2008. $25.5 million was attributable to the 12 new stores opened since July 2008. Other income, which primarily includes revenue from the Company's two department stores and from tenants within its supermarket retail locations, grew to $1.3 million in the third quarter of 2009, up 23.1% from $1.0 million in the prior year's period.

Mr. Zhuangyi Wang, Chairman and CEO, said, "We are pleased that our business has experienced another solid quarter. Our increase in total revenues was a result of opening 12 new stores over the course of the past year, including one in the third quarter, as well as a 17.1% sequential increase in same store sales for the nineteen stores that have been open over one year. Our strong top line growth is attributable to our efforts to introduce new customers to our stores and keep existing customers returning on a regular basis.

During the third quarter, we opened one new supermarket in Tongjiang city, Heilongjiang province and temporarily closed one store in Daqing due to a renovation by the building's landlord, which keeps our supermarket total at 31 stores. With a broad assortment of fresh food, grocery and non-food items, this store will provide the city's residents with a unique and fresh alternative to other shopping outlets.

During the third quarter, we achieved a major milestone by listing the shares of QKL Stores on the Nasdaq stock market. We believe this accomplishment can raise our visibility within the U.S. investment community and enhance our brand awareness in China. This listing would not be possible without the hard work and dedication of the employees at our company. We are pleased with our accomplishments this quarter and believe our growth initiatives will enhance our market position in China's Northeast province.''

In the third quarter of 2009, gross profit increased 34.3% to $10.5 million from $7.8 million in the third quarter of 2008 due primarily to the increase in sales volume, which resulted from the opening of new stores and an increase in comparable store sales. Gross margin decreased to 18.3% from 24.7% in the prior year's period. Third quarter gross margin results were in line with the Company's expectations which assumes that gross margin will be in the range of 18%-20% over the next few quarters as additional new stores, which tend to be less profitable during their early months of operation, contribute to the financial performance and the Company augments its total number of product promotions in order to increase market share and long-term sales volume.

Operating income in the third quarter of 2009 decreased 4.1% to $3.1 million from $3.2 million in the prior year period, as a result of the decreased gross margin described above. Selling expense increased to $6.3 million, or 11.1% of sales, compared to $3.9 million, or 12.5% of sales, in the prior year period. This increase was due primarily to the increase of new labor cost, utilities, depreciation and rent due to new stores. General and administrative expenses in the third quarter of 2009 increased to $1.1 million from $0.6 million in the prior year period primarily due to new employee payroll costs.

Net income in the third quarter of 2009 was $2.3 million, or $0.08 per diluted share, compared to $2.4 million, or $0.08 per diluted share, in the prior comparable period.

Balance Sheet and Cash Flow

As of September 30, 2009, the Company had $26.7 million of cash, compared to $21.3 million as of June 30, 2009 and $19.3 million as of December 31, 2008. The Company had no bank loans as of September 30, 2009.

Net cash flow from operating activities was $8.1 million in the third quarter of 2009 compared to $4.0 million in the third quarter of 2008. Net cash flow used by investing activities was $1.1 million in the third quarter of 2009 compared to $0.7 million used in the third quarter of 2008. Net cash flow used by financing activities was negligible during the third quarter of 2009, as well as during the third quarter of 2008.

Retail Store Update

During the third quarter, the Company opened one new supermarket in Tongjiang county, Heilongjiang province. Tongjiang is a border city that enjoys active trade with Russia. The Company's Tongjiang store is the largest supermarket in the local area, supporting demand from an urban population of approximately 40,000 people and is located 800 kilometers from the Company's headquarters in Daqing, China. The Tongjiang store opened its doors on September 30, 2009. The supermarket occupies approximately 3,967 sq. meters (42,711 square feet) of leased space and carries a wide variety of grocery, fresh food, and non-food product. The company also temporarily closed its Xizhai store in Daqing due to a renovation by the building's landlord. The Company signed a new contract with the developer to reopen that store in the last quarter of 2010. There were 31 supermarkets at the end of the 2009 third quarter.

Mr. Zhuangyi Wang, Chairman and Chief Executive Officer of QKL Stores, continued, "For the remainder of the year, our plan is to open three additional supermarkets in northeastern China for a total of approximately 17,300 square meters of space. To support our growth, we plan to expand our distribution capabilities by opening a second distribution center in the fourth quarter of 2009 which will allow us to support our current and future stores in the region in the coming years. There is a very large addressable market for our supermarket services in northeastern China's tier 2 and 3 cities. This is a region rich in natural resources with growing spending power. We have a unique and compelling product offering, and our reputation for high quality foods and products is unparalleled in the region. We are encouraged by our opportunities ahead as we position our business for long- term sustainable growth."

2009 Nine Month Results

In the first nine months of 2009, total revenue increased 94.7% to $175.9 million from $90.3 million in the first nine months of 2008. Gross profit increased to $32.8 million, or 18.6% of total revenue, from $21.3 million, or 23.5% of total revenue, in the prior year period. Selling expense in the first nine months of 2009 was $18.4 million, compared to $10.3 million in the first nine months of 2008. General and administrative expenses in the first nine months of 2009 increased 58.9% to $3.2 million from $2.0 million in the prior year period. Operating income in the first nine months of 2009 increased 24.2% to $11.1 million from $9.0 million in the prior year period. Net income in the first nine months of 2009 increased 78.2% to $8.3 million, or $0.28 per diluted share, from $4.7 million, or $0.15 per diluted share, in the prior comparable period.

Conference Call

The Company will conduct a conference call to discuss its third quarter 2009 results on Tuesday, November 17, 2009 at 8:30am ET. Listeners may access the call by dialing #1-877-941-4775 or 1-480-629-9760 for international callers. 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 December 1, 2009, by dialing 1-800-406-7325 or 1-303-590- 3030 for international callers; conference ID: 4184145.

About QKL Stores Inc.:

Based in Daqing, China, QKL Stores Inc. is a leading regional supermarket chain company operating in Northeast China. The Company sells a broad selection of merchandise, including groceries, fresh food, and non-food items, through its retail supermarkets, hypermarket stores, and department stores; the company also has its own distribution centers that service its supermarkets.

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

    Company Contact
     QKL Stores Inc.
     Diana Zhang & Crystal Chen
     Tel: +86-459-460-7626
     Web site: http://www.qklstoresinc.com

    Investor Relations
     ICR, Inc.
     Wei Jung Yang
     Tel: +86-10-6599-7968

     Bill Zima
     Tel: +1-203-682-8200


                    (Financial Tables on Following Pages)



                               QKL STORES INC.
                           Condensed Balance Sheets

                                               September 30,      December 31,
                                                   2009             2008
                                                (Unaudited)

    ASSETS

    Cash                                      $ 26,689,177      $ 19,285,021
    Pledged deposits                               181,693           293,149
    Trade receivables                              452,366           793,352
    Other receivables                            3,889,925         4,189,140
    Prepaid expenses                             2,111,601         1,862,591
    Advances to suppliers                        3,039,363         3,342,756
    Inventories and consumables                 15,614,718        14,544,341

    Total current assets                        51,978,843        44,310,350
    Property, plant equipment, net              15,822,986        12,960,303
    Intangible assets, net                         757,770           776,259
    Goodwill                                    19,222,986        18,878,823
    Long-term prepayment                           419,146           787,741

    Total assets                              $ 88,201,731      $ 77,713,476

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Short-term bank loans                     $         --      $  2,188,439
    Accounts payable                            24,580,735        21,283,818
    Cash card and coupon liabilities             6,256,616         3,858,514
    Deposits received                            1,561,722         2,901,205
    Accrued expenses                             1,320,638           681,969
    Other PRC taxes payable                        178,993           203,443
    Other payables                               2,806,766         1,476,665
    Income taxes payable                           761,381         1,252,336

    Total current liabilities                   37,466,851        33,846,389

    Commitments and contingencies

    Stockholders' equity
    Common stock, $.001 par value per
     share, authorized 100,000,000,
     shares, issued and outstanding
     20,82,353 at September 30, 2009 and
     December 31, 2008                              20,882            20,882
    Series A convertible preferred stock,
     par value $0.01, 10,000,000 shares
     authorized, 9,117,647 shares issued
     and outstanding at September 30,
     2009 and December, 2008                        91,176            91,176
    Additional paid-in capital                  21,783,477        21,783,477
    Statutory reserves                           3,908,247         3,908,247
    Retained earnings (accumulated
     deficit)                                   22,498,994        14,204,169
    Accumulated other comprehensive
     income                                      2,432,104         3,859,136

    Total stockholders' equity                  50,734,880        43,867,087

    Total liabilities and stockholders'
     equity                                   $ 88,201,731      $ 77,713,476



                               QKL STORES INC.
                 Unaudited Condensed Statements of Operations

                                  (Unaudited)              (Unaudited)
                                Three Months Ended       Nine Months Ended
                                   September 30,            September 30,
                                2009         2008         2009        2008

    Net revenues
      Direct sales           $55,790,251 $30,568,689 $172,301,378 $87,880,021
      Other operating income   1,288,622   1,013,733    3,550,675   2,456,883

                              57,078,873  31,582,422  175,852,053  90,336,904

    Cost of inventories sold  46,607,907  23,788,325  143,096,587  69,080,122

    Gross profit              10,470,966   7,794,097   32,755,466  21,256,782

    Selling expenses           6,348,030   3,945,824   18,424,432  10,280,984

    General and
     administrative expenses   1,051,608     647,002    3,217,258   2,025,131

    Income from operation      3,071,328   3,201,271   11,113,776   8,950,667

    Other expenses                    --          --           --   1,976,470

    Interest income               35,342      89,683      188,448     196,143

    Interest expenses                  4      41,533       20,800     170,675

    Income before provision
     for income taxes          3,106,666   3,249,421   11,281,424   6,999,665

    Provision for income
     taxes                       829,840     824,344    2,986,599   2,343,631

    Net income (loss)
     attributable to common
     stockholders             $2,276,826  $2,425,077   $8,294,825  $4,656,034

    Weighted average number
     of shares outstanding
       Basic                  20,882,353  20,882,353   20,882,353  20,882,353
       Diluted                30,000,000  31,127,457   30,000,000  30,753,466
      Net income (loss)
       per share
       Basic                       $0.11       $0.12        $0.40       $0.22
       Diluted                      0.08        0.08         0.28        0.15



                               QKL STORES INC.
                 Unaudited Condensed Statements of Cash Flows


                                     Nine Months Ended      Nine Months Ended
                                    September 30, 2009      September 30, 2008
                                       (Unaudited)              (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                     $8,294,825             $4,656,034
      Depreciation                           1,869,122              1,300,368
      Amortization                              20,359                 24,026
     Loss on disposal of plant and
       equipment                                51,040                 37,295
      Adjustments to reconcile net income
     (loss) to net cash used in operating
     activities:
     Accounts receivables                      342,666                     --
     Other receivables                         309,164             (3,199,657)
     Inventories and consumables            (1,034,325)              (871,726)
     Advances to suppliers                     311,285               (482,372)
     Prepaid expenses                         (614,555)              (998,758)
     Accounts payable                        2,225,442              8,150,921
     Cash card and coupon liabilities        2,387,021              1,036,247
     Deposits received                        (317,626)              (655,423)
     Accruals                                  636,669                393,631
     Other PRC taxes payable                   (24,927)                69,085
     Other payables                          1,277,448                539,059
     Income taxes payable                     (493,640)               415,374

    Net cash provided by (used in)
     operating activities                   15,239,968             10,414,104

    CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of plant and equipment        (4,246,550)            (1,612,321)
     Sales proceed of fixed assets              21,162                 92,561
     Payment of long term prepayments               --                (32,154)
     Increase(Decrease) pledged deposits       111,456               (300,000)

    Net cash provided by (used in)
     investing activities                   (4,113,932)            (1,851,914)

    CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of Series A
      convertible preferred stock                   --             15,500,000
     Repayment of bank loan                 (2,192,178)            (2,857,608)

    Net cash provided by financing
     activities                             (2,192,178)            12,642,392

    Net increase (decrease) in cash          8,933,858             21,204,582

    Effect of foreign currency translation
     on and cash equivalents                (1,529,702)             1,261,970

    Cash at beginning of period             19,285,021             10,742,064
    Cash at end of period                 $ 26,689,177             33,208,616

    Supplemental disclosures of cash flow
     information:
     Interest received                    $    188,448                196,143
     Interest paid                              20,800                170,675
     Income taxes paid                    $  2,504,587              1,928,258

SOURCE QKL Stores Inc.

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