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QKL Stores Inc. Announces First Quarter 2015 Financial Results

-- 1Q15 Revenue Decreased by 7.7% to $92.6 million from $86.0 million in 1Q14 --

-- 1Q15 Gross Profit Decreased by 4.1% to $15.3 million from $14.7 million in 1Q13 --


News provided by

QKL Stores Inc.

May 15, 2015, 06:00 ET

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DAQING, China, May 15, 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 first quarter ended March 31, 2015.

Mr. Zhuangyi Wang, Chairman and CEO, said, "We closed two stores in the first quarter, and finished the first quarter operating a total of 47 stores, comprised of 26 supermarkets, 17 hypermarkets and 4 department stores. As our new store opening plan for 2015, the two more new stores are going to open in the second half of the year, we expect our profitability to improve as we benefit from our improving new store sales, increased same store sales at existing stores and reduced store opening and promotional expenses." 

"We were also pleased with the improvement of our operating cash flows in the first quarter due to a reduction in inventory after the peak Chinese New Year season and a decrease in other receivables attributable to cash recovery from our vendors after the busy holiday season. We are pleased with our execution in the first quarter and are setting the stage for increased top and bottom line growth in the coming quarters."

First Quarter 2015 Financial Results

Revenue increased $6.6 million, or 7.7%, to $92.6 million for the three months ended March 31, 2015 from $86.0 million for the three months ended March 31, 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 $79.6 million in sales in the first quarter of 2015, a decrease of $0.7 million, or 0.9% compared with $80.3 million in net sales in the first quarter of 2014. New store sales increased, reflecting the opening of five new stores since January 1, 2014. The store generated approximately $10.8 million in sales in the first quarter of 2015.

Gross profit, or total revenue minus cost of sales, increased by $0.6million, or 4.1%, to $15.3million, or 16.5% of net sales, in the first quarter of 2015from $14.7 million, or 17.1% of net sales, in the first quarter of 2014. The change in gross profit was primarily attributable to an increase in net sales of $6.6million in the first quarter of 2015compared to the first 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 were$16.3million, or 17.6% of net sales, in the first quarter of 2015, and$13.3 million, or 15.4% of net sales, in the first quarter of 2014. The change in selling expenses was mainly due to a increase in expenses in labor costs, promotion expenses, utilities for three months ended March 31, 2015 compared to the same period in 2014. In specific, labor costs increased by $0.8 million or 15.4%, to $6.0 million in the first quarter of 2015 from $5.2 million in the first quarter of 2014.  Promotion expenses increased by $0.5 million, or 50.0%, to $1.5 million in the first quarter of 2015 from $1.0 million in the first quarter of 2014.  Utilities increased by $0.4 million, or 28.6%, to $1.8 million in the first quarter of 2015 from $1.4 million in the first quarter of 2014.

General and administrative expenses decreased by $0.7 million, or 21.9%, to $2.5 million, or 2.7% of net sales, in the first quarter of 2015 from $3.2 million, or 3.8% of net sales, in the first quarter of 2014.  The decrease was mainly due to the control of our administrative expenses.

Our net loss for the first three months of 2015 was $4.6 million, or $3.01 per diluted share, from $3.1 million, or $2.01 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 first three months 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

(Financial Tables on Following Pages)

QKL STORES INC. AND SUBSIDIARIES


Condensed Consolidated Balance Sheets











March 31, 
2015



December 31, 
2014




(Unaudited)





ASSETS









Cash


$

43,556,481



$

9,013,006


Restricted cash



21,321,692




8,623,748


Accounts receivable



777,226




949,211


Inventories



36,059,844




62,605,754


Other receivables



20,798,536




21,375,611


Prepaid expenses



12,165,117




12,114,028


Advances to suppliers



8,142,582




8,653,037


Deferred income tax assets – current portion



2,830,110




2,839,714


Total current assets



145,651,588




126,174,109


Property, plant and equipment, net



38,315,997




37,843,171


Land use rights, net



679,640




684,375


Deferred income tax assets – non-current portion



61,937




61,681


Other assets



11,954




11,880


Total assets


$

184,721,116



$

164,775,216


LIABILITIES AND SHAREHOLDERS' EQUITY









Short-term loans


$

85,449,139



$

60,201,757


Accounts payable



36,109,828




37,206,633


Cash card and coupon liabilities



14,240,625




14,539,728


Customer deposits received



1,990,598




2,005,136


Accrued expenses and other payables



23,413,936




23,147,611


Income taxes payable



119,810




241,189


Total current liabilities



161,323,936




137,342,054


Total liabilities



161,323,936




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 March 31, 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 March 31, 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



(93,699,363)




(89,116,190)


Accumulated other comprehensive income



15,005,560




14,458,369


Total shareholders' equity



23,397,180




27,433,162


Total liabilities and shareholders' equity


$

$184,721,116



$

164,775,216


QKL STORES INC. AND SUBSIDIARIES


Condensed Consolidated Statements of Income








(Unaudited)




Three Months Ended March 31,




2015



2014









Net sales


$

92,557,686



$

86,032,676


Cost of sales



77,297,468




71,300,517


Gross profit



15,260,218




14,732,159











Operating expenses:









Selling expenses



16,331,821




13,280,183


General and administrative expenses



2,509,702




3,233,410


Total operating loss



18,841,523




16,513,593











Loss from operations



(3,581,305)




(1,781,434)




















Non-operating expense:









Interest income



86,441




230,098


Interest expense



(1,080,214)




(1,499,243)


Total non-operating loss



(993,773)




(1,269,145)











Loss before income taxes



(4,575,078)




(3,050,579)











Income taxes



8,095




5,872











Net loss



(4,583,173)




(3,056,451)











Comprehensive income statement:









Net loss



(4,583,173)




(3,056,451)


Foreign currency translation adjustment



547,191




(753,173)


Comprehensive loss


$

(4,035,982)



$

(3,809,624)





























Basic loss per share of common stock


$

(3.01)



$

(2.01)


Diluted loss per share


$

(3.01)



$

(2.01)











Weighted average shares used in calculating loss per common stock – basic



1,522,326




1,522,326


Weighted average shares used in calculating lossper common stock – diluted



1,522,326




1,522,326


QKL STORES INC. AND SUBSIDIARIES


Condensed Consolidated Statements of Cash Flows








(Unaudited)




Three Months Ended March 31,




2015



2014


CASH FLOWS FROM OPERATING ACTIVITIES:









Net loss


$

(4,583,173)



$

(3,056,451)


Depreciation



1,026,828




1,646,376


Amortization



7,546




7,383


Share-based compensation



-




102,014


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









Accounts receivable



175,243




241,021


Inventories



27,301,888




10,390,643


Other receivables



663,179




2,167,725


Prepaid expenses



(814)




3,544,791


Advances to suppliers



544,248




2,185,374


Accounts payable



(1,246,364)




(4,683,343)


Cash card and coupon liabilities



(358,050)




4,352,101


Customer deposits received



(22,771)




(322,039)


Accrued expenses and other payables



174,517




1,423,767


Income taxes payable



(121,906)




(25)


Net cash provided by operating activities



23,560,371




17,999,337











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchases of property, plant and equipment



(1,341,384)




-


Increase of restricted cash



(12,613,111)




(81,623)


Net cash used in investing activities



(13,954,495)




(81,623)











CASH FLOWS FROM FINANCING ACTIVITIES:









Repayment of bank borrowings



(35,804,961)




-


Bank loan borrowing



60,705,683




3,268,054


Net cash used in financing activities



24,900,722




3,268,054











Effect of foreign currency translation



36,877




(228,009)











Net increase in cash



34,506,598




21,185,768


Cash – beginning of period



9,013,006




9,245,212


Cash – end of period


$

43,556,481



$

30,202,971











Supplemental disclosures of cash flow information:









Interest paid


$

1,080,214



$

1,499,243


Income taxes paid


$

171,121



$

5,847











SOURCE QKL Stores Inc.

Related Links

http://www.qklstoresinc.com

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