QKL Stores Inc. Announces Fourth Quarter and Full Year 2015 Financial Results
DAQING, China, April 14, 2016 /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 fourth quarter and full year financial results ended December 31, 2015.
Mr. Zhuangyi Wang, Chairman and CEO, said, "As QKL expands its market presence in northeast China, we are uniquely positioned against our local competitors through our large product offering, strong supplier relationships, efficient distribution network and state-of-the-art IT system. We are comfortable with our opportunities in 2015 and believe we'll see an improvement in operating expenses and profit growth in coming quarters.
"In 2015, we closed three stores; as of December 31, 2015, we operated 25 supermarkets, 16 hypermarkets, 4 department stores and 5 distribution centers situated in Daqing, Harbin Changchun and Jiamusi, respectively.
"As we advance into 2015, we expect to open one new supermarket this year. We maintain confidence in our strategy of strengthening our store presence in Tier 4 and 5 cities in northeastern China as well as in our core region of operation around Daqing where the majority of our older stores are based."
Fourth Quarter 2015 Financial Results
Revenue in the fourth quarter of 2015 decreased by 17.7% to $62.4 million from $75.8 million in the fourth quarter of 2014. Comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by October 1, 2014. Those 40 stores generated approximately $55.0 million in sales in the fourth quarter of 2015, representing a decrease of $10.1 million, or 15.6% compared with $65.1 million in sales in fiscal 2014. New store sales increased, reflecting the opening of 5 new stores since October 1, 2014. These stores generated approximately $7.4 million in sales in the fiscal 2015.
Gross profit decreased by 17.3% year over year to $10.5 million, compared to $12.7 million in the prior year period. Gross profit as a percentage of revenue for the fourth quarter of 2015 was 16.9%, compared to 16.8% for the fourth quarter of 2014. The change in gross profit was primarily attributable to net sales decreased by $13.4 million in fiscal 2015 compared to fiscal 2014.
Operating expenses increased by 24.4% to $30.6 million compared to $24.6 million in the prior year period. The change in operating expenses was mainly due to the increase in expenses, including salaries, utility and advertising in fiscal 2015. The increase was also due to a $5.0 million of long-lived asset impairment charges during fiscal 2015.
We had a net loss of $18.3 million in the fourth quarter of 2015 compared with net loss of $14.7 million in the fourth quarter of 2014.
Full Year 2015 Financial Results
Net sales decreased by $4.5 million, or 1.6%, to $270.1 million for fiscal 2015 from $274.6 million for fiscal 2014. Comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2014. Those 40 stores generated approximately $235.3 million sales in fiscal 2015, a decrease of $11.4 million, or 4.6% compared with $246.7 million sales in fiscal 2014. New store sales increased, reflecting the opening of 5 new stores since January 1, 2014. These stores generated approximately $31.8 million in sales in the fiscal 2015. The number of stores including supermarkets/hypermarkets and department stores at fiscal 2015 was 45 versus 48 at fiscal 2014.
Gross profit, or total revenue minus cost of sales, was decreased by $0.7 million, or 1.7%, to $45.7 million, or 16.9% of net sales, in fiscal 2015 from $46.4 million, or 16.9% of net sales, in fiscal 2014. The change in gross profit was primarily attributable to net sales decreasing by $4.5 million in fiscal 2015 compared to fiscal 2014.
Operating expenses increased by $2.8 million, or 4.8%, to $61.6 million, or 22.8% of net sales, in fiscal 2015 from $58.7 million, or 21.4% of net sales, in fiscal 2014. The change in operating expenses was mainly due to the increase in expenses, including salaries, utility and advertising in fiscal 2015. The increase was also due to $5.0 million of long-lived asset impairment charges during fiscal 2015.
We had a net loss of $31.2 million in fiscal 2015 compared with net loss of $27.0 million in fiscal 2014. The number of shares used in the computation of diluted EPS was 1,522,326 shares in fiscal 2015 and 2014.
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 |
||||||||
| Consolidated Balance Sheets |
||||||||
| December 31, 2015 |
December 31, 2014 |
|||||||
| ASSETS |
||||||||
| Cash |
$ |
9,059,312 |
$ |
9,013,006 |
||||
| Restricted cash |
8,164,524 |
8,623,748 |
||||||
| Short term investment |
107,830 |
- |
||||||
| Accounts receivable |
667,842 |
949,211 |
||||||
| Inventories |
57,911,057 |
62,605,754 |
||||||
| Other receivables |
19,119,889 |
21,375,611 |
||||||
| Prepaid expenses |
9,388,381 |
12,114,028 |
||||||
| Advances to suppliers |
10,959,426 |
8,653,037 |
||||||
| Deferred income tax assets – current portion |
2,058,207 |
2,839,714 |
||||||
| Total current assets |
117,436,468 |
126,174,109 |
||||||
| Property, plant equipment, net |
23,658,581 |
37,843,171 |
||||||
| Land use rights, net |
619,318 |
684,375 |
||||||
| Deferred income tax assets – non-current portion |
1,253,286 |
61,681 |
||||||
| Other assets |
6,224 |
11,880 |
||||||
| Total assets |
$ |
142,973,877 |
$ |
164,775,216 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Short term bank loans |
69,319,285 |
60,201,757 |
||||||
| Accounts payable |
41,062,255 |
37,206,633 |
||||||
| Cash card and coupon liabilities |
13,556,213 |
14,539,728 |
||||||
| Customer deposits received |
2,866,632 |
2,005,136 |
||||||
| Accrued expenses and other payables |
21,636,314 |
23,147,611 |
||||||
| Income taxes payable |
43,364 |
241,189 |
||||||
| Total current liabilities |
148,484,063 |
137,342,054 |
||||||
| Warrant liabilities |
- |
- |
||||||
| Total liabilities |
148,484,063 |
137,342,054 |
||||||
| Commitments and contingencies |
- |
- |
||||||
| Shareholders' equity |
||||||||
| Common stock, $0.001 par value per share, authorized 100,000,000 shares, issued and outstanding 1,522,326 and 1,522,326 shares at December 31, 2015 and December 31, 2014 respectively |
1,522 |
1,522 |
||||||
| Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares, issued and outstanding 529,412 and 529,412 shares at December 31, 2015 and December 31, 2014 |
5,294 |
5,294 |
||||||
| Additional paid-in capital |
93,746,014 |
93,746,014 |
||||||
| Retained earnings – appropriated |
8,342,969 |
8,338,153 |
||||||
| Retained earnings |
(120,345,590) |
(89,116,190) |
||||||
| Accumulated other comprehensive income |
12,739,605 |
14,458,369 |
||||||
| Total shareholders' equity |
(5,510,186) |
27,433,162 |
||||||
| Total liabilities and shareholders' equity |
$ |
142,973,877 |
$ |
164,775,216 |
||||
| QKL STORES INC. AND SUBSIDIARIES |
||||||||
| Consolidated Statements of Operations |
||||||||
| Years Ended December 31, |
||||||||
| 2015 |
2014 |
|||||||
| Net sales |
$ |
270,064,086 |
$ |
274,636,920 |
||||
| Cost of sales |
224,410,425 |
228,215,577 |
||||||
| Gross profit |
45,653,661 |
46,421,343 |
||||||
| Operating expenses: |
||||||||
| Selling expenses |
61,552,981 |
58,724,799 |
||||||
| General and administrative expenses |
11,933,688 |
8,879,070 |
||||||
| Total operating expenses |
73,486,669 |
67,603,869 |
||||||
| Loss from operations |
(27,833,008) |
(21,182,526) |
||||||
| Non-operating income(expense): |
||||||||
| Interest income |
564,320 |
622,988 |
||||||
| Interest expense |
(4,714,296) |
(4,436,526) |
||||||
| Total non-operating income |
(4,149,976) |
(3,813,538) |
||||||
| Loss before income tax |
(31,982,984) |
(24,996,064) |
||||||
| Income taxes |
(758,400) |
1,965,765 |
||||||
| Net loss |
$ |
(31,224,584) |
$ |
(26,961,829) |
||||
|
Comprehensive loss statement: |
||||||||
| Net loss |
(31,224,584) |
(26,961,829) |
||||||
| Foreign currency translation adjustment |
(1,718,764) |
501,580 |
||||||
| Comprehensive loss |
$ |
(32,943,348) |
$ |
(26,460,249) |
||||
|
*Basic earnings per share of common stock |
$ |
(20.51) |
$ |
(17.71) |
||||
| *Diluted earnings per share |
$ |
(20.51) |
$ |
(17.71) |
||||
| *Weighted average shares used in calculating net income per ordinary share – basic |
1,522,326 |
1,522,326 |
||||||
| *Weighted average shares used in calculating net income per ordinary share – diluted |
1,522,326 |
1,522,326 |
||||||
| QKL STORES INC. AND SUBSIDIARIES |
||||||||
| Consolidated Statements of Cash Flows |
||||||||
| Years Ended December 31, |
||||||||
| 2015 |
2014 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ |
(31,224,584) |
$ |
(26,961,829) |
||||
| Depreciation-property, plant and equipment |
4,079,764 |
4,942,830 |
||||||
| Amortization |
29,820 |
30,223 |
||||||
| Deferred income tax |
(588,435) |
(60,393) |
||||||
| Loss on disposal of property, plant and equipment |
3,740,273 |
1,205,657 |
||||||
| Share-based compensation |
- |
408,057 |
||||||
| Provision/(reversal) on PPE, inventory, other receivables and sales return |
5,164,943 |
(378,576) |
||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Accounts receivable |
240,563 |
(394,389) |
||||||
| Inventories |
1,555,062 |
1,761,003 |
||||||
| Other receivables |
880,704 |
880,698 |
||||||
| Prepaid expenses |
2,168,357 |
(2,250,285) |
||||||
| Advances to suppliers |
(2,883,981) |
(871,150) |
||||||
| Accounts payable |
6,083,334 |
1,552,356 |
||||||
| Cash card and coupon liabilities |
(218,068) |
(3,829,348) |
||||||
| Customer deposits received |
1,009,143 |
1,026,003 |
||||||
| Accrued expenses and other payables |
(1,894,818) |
5,209,616 |
||||||
| Income taxes payable |
(192,789) |
1,972,000 |
||||||
| Net cash used in operating activities |
(12,050,712) |
(15,757,527) |
||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of short term investment |
(112,381) |
- |
||||||
| Purchases of property, plant and equipment |
(459,504) |
(4,230,820) |
||||||
| Sales proceeds of fixed assets disposal |
322,444 |
277,290 |
||||||
| Net cash used in investing activities |
(249,441) |
(3,953,530) |
||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Bank repayment |
(59,401,490) |
(40,678,849) |
||||||
| Bank borrowings |
72,245,055 |
60,204,696 |
||||||
| Net cash provided by financing activities |
12,843,565 |
19,525,847 |
||||||
| Net increase/(decrease) in cash |
543,412 |
(185,210) |
||||||
| Effect of foreign currency translation |
(497,106) |
(46,996) |
||||||
| Cash at beginning of period |
9,013,006 |
9,245,212 |
||||||
| Cash at end of period |
$ |
9,059,312 |
$ |
9,013,006 |
||||
| Supplemental disclosures of cash flow information: |
||||||||
| Interest paid |
4,714,296 |
4,436,526 |
||||||
| Income taxes (received) |
$ |
(27,860) |
$ |
(45,196) |
||||
SOURCE QKL Stores Inc.
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