China Xiniya Fashion Limited Reports 2015 Second Quarter Financial Results

XIAMEN, China, Oct. 7, 2015 /PRNewswire/ -- China Xiniya Fashion Limited ("Xiniya" or the "Company"NYSE: XNY), a leading provider of men's business casual apparel in China, today reported financial results for the second quarter of 2015. The unaudited consolidated financial statements and other financial information included in this press release have been prepared in conformity with International Financial Reporting Standards ("IFRS").  

The Company publishes its consolidated financial statements in Renminbi ("RMB").  

Second Quarter 2015 Highlights

• Revenue during the second quarter of 2015 decreased by 47.2% to RMB106.4 million, as compared to RMB201.7 million in the second quarter of 2014.
• Gross margin was 20.8% of revenue in the second quarter of 2015 as compared to 27.0% in the second quarter of 2014.
• Loss before taxation during the second quarter of 2015 was RMB8.7 million as compared to profit before taxation of RMB18.4 million in the second quarter of 2014.
• Net loss in the second quarter of 2015 was RMB6.8 million as compared to net profit of RMB13.3 million in the second quarter of 2014.
• Loss per ADS amounted $0.08 in the second quarter of 2015 as compared to earnings per ADS of $0.15 per ADS in the second quarter of 2014.
• Xiniya's network of authorized retailers had a net increase of 31 authorized retail outlets in the second quarter of 2015, consisting of 64 new retail outlets opened and 33 retail outlets closed. The total number of authorized retail outlets was 635 as of June 30, 2015.

Recent development 

• The Company successfully held its 2015 Winter Collection Sales Fair in June 2015 in Xiamen City, Fujian Province. The Company's distributors and authorized retailers in attendance placed their orders for Xiniya's latest 2015 Winter collection. Xiniya exhibited over 500 new products during the sales fair including apparel, shoes, bags and accessories for distributors and authorized retailers to select from based on each store's location, climate and local consumer taste. Deliveries will take place during the fourth quarter of 2015. The distributors will then either deliver these products to authorized retailers or display them in their own retail outlets. The total orders for the 2015 Winter Collection increased 15%, when compared to the total orders from the corresponding period last year. 

Chairman's statement

"I am pleased to report that orders for our 2015 Winter Collection Sales Fair increased 15% despite the continued challenging economic environment and increased competition in China's menswear industry," commented Mr. Qiming Xu, Xiniya's Chairman and Chief Executive Officer. "To further support and stabilize our retail network during this transition period, we implemented the second phase of our inventory buyback. We are beginning to see a definite positive impact on our business from the buyback initiatives and expect this progress to continue for the rest of the year. Confidence from our distributors and existing and prospective authorized retailers has improved, evidenced by the increase in orders from our sales fair and the net increase in number of authorized retail outlets. While we expect the economic environment to remain challenging, we are confident that our strategy to adjust our business will ensure the long-term sustainability of our business and brand."

Second Quarter 2015 Results

Revenue for the second quarter of 2015 was RMB106.4 million, a 47.2% decrease from RMB201.7 million during the second quarter of 2014. The Company delivered approximately 730,000 units to its distributors during the second quarter of 2015, compared with 1,192,000 units during the second quarter of 2014. As of June 30, 2015, the Company had a total of 635 retail outlets. The table below sets forth the number of retail outlets by outlet type:

Gross profit during the second quarter of 2015 was RMB22.1 million, a decrease from RMB54.4 million during the second quarter of 2014. Gross margin was 20.8% of revenue in the second quarter of 2015 as compared with 27.0% in the second quarter of 2014. The decrease in gross margin was primarily due to an increase in research and development expenses as a percentage of total sales in the second quarter of 2015 and a decrease in retail prices to improve the price competitiveness and attractiveness of the Company's products to consumers.  

Interest and other income was RMB4.7 million in the second quarter of 2015 as compared to RMB5.3 million in the second quarter of 2014. The decrease was mainly due to lower time deposits of RMB370 million placed with banks in the second quarter of 2015 as compared to time deposits of RMB600 million placed with banks during the same period last year.

Selling and distribution expenses were RMB29.8 million in the second quarter of 2015, a decrease from RMB34.4 million during the second quarter of 2014. The decrease was primarily due to a decrease of RMB4.1 million in rack expenses for authorized retailers, as well as a decrease in packaging expenses.  

Administrative expenses were RMB5.7 million in the second quarter of 2015, a decrease from RMB7.0 million during the second quarter of 2014. The decrease was primarily due to reduction of headcounts, office and other miscellaneous expenses during the second quarter of 2015.

Loss before taxation was RMB8.7 million in the second quarter of 2015, as compared to profit before taxation of RMB18.4 million during the second quarter of 2014.  

Income tax benefit in the second quarter of 2015 was RMB2.0 million, as compared to income tax expense of RMB5.0 million during the second quarter of 2014.  

Loss after taxation for the second quarter of 2015 was RMB6.8 million, as compared to profit after taxation of RMB13.3 million during the second quarter of 2014. Loss per ADS was $0.08 in the second quarter of 2015, compared to earnings per ADS of $0.15 in the second quarter of 2014.

Financial Position

As of June 30, 2015, the Company had cash and cash equivalents of RMB699.0 million, and time deposits of RMB120.0 million held at banks with maturities of more than three months.  

As of June 30, 2015, the Company had inventory of RMB217.7 million. The increase in inventory, as compared to December 31, 2014, was primarily due to the Company's repurchase of approximately RMB211.3 million of inventory from certain distributors in the second quarter of 2015. This inventory was written down by RMB115.6 million. Correspondingly, the provision for this liability, which was recorded in 2014, was reduced by RMB115.6 million.

Conference Call

Xiniya will host a conference call and live webcast at 8 a.m. Eastern Daylight Time (EDT) on October 8, 2015, (8 p.m. Beijing time on the same day).

The toll free dial-in details for the live conference call are as follows:

A live webcast of the conference call will be available on: http://www.corpasia.net/cancast/us/index.php?id=usXNY_37&version=e  

A telephone replay of the call will be available 2 hours after the end of the conference through November 6, 2015 at 8 a.m. EST.  

The dial-in details for the replay are as follows:

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Exchange Rate Information

The United States dollar ($) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the certified exchange rate of $1.00 = RMB6.2000 on June 30, 2015 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into $ at that rate on June 30, 2015, or at any other date. The percentages stated are calculated based on RMB amounts.  

About China Xiniya Fashion Limited

Xiniya is a leading provider of men's business casual apparel in China. The Company designs men's business casual and business formal apparel and accessories, which are marketed under the Xiniya brand, and sells through its distribution network that includes 22 distributors. Its products are sold to consumers at over 600 authorized retail outlets owned and managed by third parties located in 22 provinces, four autonomous regions, and four municipalities in China. This retail network focuses on second and lower-tier cities, where increasing affluence has led to an improvement in living standards and where most international men's apparel brands do not have a significant presence. The Company's target consumers are male working professionals in China between the ages of 25 and 45 who seek fashionable clothing to suit their working and lifestyle needs. For more information, please visit the Company's website at http://www.xiniya.com.

For additional information, please contact:

China Xiniya Fashion Limited
Mr. Chee Jiong Ng
Chief Financial Officer
Telephone: +86 1365 5939 932
Email: [email protected]  

Christensen

Ms. Linda Bergkamp
Phone: +1-480-614-3004 in U.S.A.
Email: [email protected]

or

Mr. Christian Arnell
Telephone +86 10 5900-1548 in Beijing
email: [email protected] 
  

SOURCE China Xiniya Fashion Limited