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 --

May 15, 2015, 06:00 ET from QKL Stores Inc.

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