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QKL Stores Inc. Announces Third Quarter 2012 Financial Results

Date : 11/14/2012 @ 5:00PM
Source : PR Newswire (US)
Stock : Qkl Stores, Inc. (MM) (QKLS)
Quote : 2.98  0.13 (4.56%) @ 5:40AM
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QKL Stores Inc. Announces Third Quarter 2012 Financial Results

Qkl Stores, Inc. (MM) (NASDAQ:QKLS)
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QKL Stores Inc. Announces Third Quarter 2012 Financial Results

DAQING, China, Nov. 14, 2012 /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 third quarter ended September 30, 2012.

Mr. Zhuangyi Wang, Chairman and CEO, said, "Our third quarter results generally met our levels of expectation. The variety, value and freshness of our products continue to resonate with our customers driving sales higher. This store growth was also driven by in-store promotional events such as store anniversary celebrations.

"We plan to open 1 additional store this year.  The new stores we will open in the future will be located in Daqing City where we have stronger relationships with local vendors and the cost of goods is slightly lower than the other cities in which we operate." 

"As our new store opening plan modifies from the first half of the year, we believe that preliminary new store opening expenses will decrease in the coming quarters as our total store sales rise, labor & utility costs stabilize and new store marketing expenses ease.  For the remaining one quarters of 2012, we believe our gross margin will remain stable in the 16.8%-17.3% range, operating expenses as a percent of total revenue will move back into the 14.5%-15.5% range."

"We look forward to the upcoming holiday season as we have a number of exciting marketing initiatives planed. Our balance sheet is healthy with a strong cash position, low level of debt and stable flow of cash from operations. We continue to make progress with our store operations and that can result in greater sales and profits over time."

Third Quarter 2012 Financial Results

Revenue in the third quarter of 2012 increased by $2.2 million, or 2.8%, to $84.3 million for the three months ended September 30, 2012 from $82.1 million for the three months ended September 30, 2011. Same store sales represent sales from stores that were opened for at least one year before the beginning of the comparison period, or by July 1, 2011. Same store (47 stores) sales generated approximately $78.1 million sales in the third quarter of 2012, an increase of $2.7 million, or 3.6% compared with $75.4 million net sales in the third quarter of 2011. New store sales increased, reflecting the net opening of 4 new stores since July 1, 2011. The new stores generated approximately $4.1 million sales in the third quarter of 2012.

Gross profit decreased by 0.3% year-over-year to $14.15 million, compared to $14.19 million in the prior year period. The decrease in gross margin was primarily attributable to the increase in competition in Daqing area. In this competitive marketplace, it is likely that we will focus on providing our customers with low prices in order to increase our market share and long-term sales volume.

Selling expenses increased by $0.3 million, or 2.2%, to $13.3 million, or 15.8% of net sales, in the third quarter of 2012 from $13.0 million, or 15.9% of net sales, in the third quarter of 2011. The change in selling expense was mainly due to increase in labor costs resulting from an increase in the number of store employees and pay increases.

General and administrative expenses decreased by $0.2 million, or 11.1%, to $2.1 million, or 2.5% of net sales, in the third quarter of 2012 from $2.3 million, or 2.8% of net sales, in the third quarter of 2011. The decrease was mainly due to our control on our headquarters' expenses.

For the three months ended September 30, 2012, our net loss was $1.1 million, or $(0.105) per diluted share, compared to $0.8 million, or ($0.082) per diluted share, for the three months ended September 30, 2011. 

As of September 30, 2012, the Company had $27.4 million in unrestricted cash and bank loans of $15.8 million, compared to $28.0 million as of September 30, 2011 with bank loans of $3.1 million.

As of September 30, 2012, the Company operated 51 stores totaling 275,000 sq. meters compared to 53 stores totaling 283,000 sq. meters in the prior year period.

Conference Call

Management will host a conference call at 8:30 am ET on Wednesday, November 14th, 2012. To participate, please dial one of the local access numbers, listed below. The conference call identification number is 10017432.

Participant Dial In (Toll Free):                             

1-800-860-2442

Participant International:                                      

1-412-858-4600

Canadian Dial In (Toll Free):                               

1-866-605-3852

China (N) Toll Free:                                           

10-800-712-2304

China (S) Toll Free:                                           

10-800-120-2304

Hong Kong Toll Free:                                        

800-962475

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

Condensed Consolidated Balance Sheets

 



September 30, 

2012


December 31,

2011



(Unaudited)



ASSETS





Cash


$

27,387,082


$

9,037,550

Restricted cash



253



253

Accounts receivable



117,230



115,163

Inventories



45,567,703



54,336,501

Other receivables



8,990,737



11,991,134

Prepaid expenses



5,945,518



6,085,379

Advances to suppliers



8,124,527



10,160,552

Deferred income tax assets



2,979,111



2,972,570

Total current assets



99,112,161



94,699,102

Property, plant and equipment, net



41,973,123



43,042,136

Land use rights, net



725,192



748,410

Goodwill



26,567,797



26,346,942

Other assets



468,894



520,559

Total assets


$

168,847,167


$

165,357,149

LIABILITIES AND SHAREHOLDERS' EQUITY







Short-term loans


$

15,787,812


$

10,998,162

Accounts payable



26,508,022



28,417,894

Cash card and coupon liabilities



16,273,617



16,024,437

Customer deposits received



791,673



931,604

Accrued expenses and other payables



14,005,318



14,328,656

Income taxes payable



176,242



227,016

Total current liabilities



73,542,684



70,927,769

Total liabilities



73,542,684



70,927,769

Shareholders' equity







Common stock, $0.001 par value per share, authorized 100,000,000 shares, issued and outstanding  10,527,637 and 10,448,197 shares at September 30, 2012 and December 31, 2011, respectively*



10,527



10,448

Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares, issued and outstanding 5,457,960 and 5,694,549 at September 30, 2012 and December 31, 2011, respectively



54,580



56,945

Additional paid-in capital



91,828,974



91,610,531

Retained earnings – appropriated



7,282,560



7,282,560

Retained earnings



(16,025,611)



(15,758,416)

Accumulated other comprehensive income



12,153,453



11,227,312

Total shareholders' equity



95,304,483



94,429,380

Total liabilities and shareholders' equity


$

168,847,167


$

165,357,149

 

QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

 



(Unaudited)



(Unaudited)



Three Months

Ended September 30,



Nine Months

Ended September 30,



2012



2011



2012



2011

Net sales


$

84,343,510



$

82,068,788



$

279,603,670



$

266,833,256

Cost of sales



70,189,152




67,874,242




231,825,748




219,918,263

Gross profit



14,154,358




14,194,546




47,777,922




46,914,993

















Operating expenses:
















Selling expenses



13,330,045




13,040,763




40,878,831




38,327,459

General and administrative expenses                                    



2,074,153




2,333,267




6,539,428




6,483,350

Total operating expenses



15,404,198




15,374,030




47,418,259




44,810,809

















(Loss) income from operations



(1,249,840)




(1,179,484)




359,663




2,104,184

































Non-operating income (expense):
















Interest income



111,903




175,745




216,674




629,130

Interest expense



(295,564)




(10,593)




(691,212)




(41,693)

Total non-operating income (expense)



(183,661)




165,152




(474,538)




587,437

















(Loss) income before income taxes



(1,433,501)




(1,014,332)




(114,875)




2,691,621

















Income taxes



(326,094)




(164,822)




152,320




986,869

















Net (loss) income


$

(1,107,407)



$

(849,510)



$

(267,195)



$

1,704,752

















Comprehensive income statement:
















Net (loss) income


$

(1,107,407)



$

(849,510)



$

(267,195)



$

1,704,752

Foreign currency translation adjustment



(25,012)




1,023,116




926,141




3,385,552

Comprehensive income


$

(1,132,419)



$

173,606



$

658,946



$

5,090,304

















Weighted average number of shares outstanding:
















Basic*



10,527,637




10,362,508




10,514,746




10,071,728

Diluted*



10,527,637




10,362,508




10,514,746




12,346,380

















(Losses) earnings per share:
















Basic*


$

(0.105)



$

(0.082)



$

(0.025)



$

0.138

Diluted*


$

(0.105)



$

(0.082)



$

(0.025)



$

0.138

 

 

QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

 



(Unaudited)



Nine Months

Ended September 30,



2012



2011

CASH FLOWS FROM OPERATING ACTIVITIES:






Net (loss) income


$

(267,195)



$

1,704,752

Depreciation – property, plant and equipment



4,926,896




5,815,703

Amortization



21,672




22,519

Share-based compensation



637,786




648,474

Deferred income tax



7,866




(225,151)

Loss on disposal of fixed assets



6,128




153,494

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








Accounts receivable



(1,510)




(562,574)

Inventories



9,041,509




3,086,917

Other receivables



3,319,138




18,037,812

Prepaid expenses



223,775




604,642

Advances to suppliers



2,087,430




(2,500,125)

Accounts payable



(2,049,728)




(3,476,958)

Cash card and coupon liabilities



171,689




2,975,779

Customer deposits received



(144,596)




(13,012)

Accrued expenses and other payables



(490,608)




2,996,074

Income taxes payable



(51,928)




(1,904,396)

Net cash provided by operating activities



17,438,324




27,363,950









CASH FLOWS FROM INVESTING ACTIVITIES:








Purchases of property, plant and equipment



(3,648,874)




(20,686,955)

Decrease of restricted cash



-




69,952

Net cash used in investing activities



(3,648,874)




(20,617,003)

















CASH FLOWS FROM FINANCING ACTIVITIES:








Bank loan borrowing



7,902,077




3,074,081

Bank loan repayment



(3,157,562)




-

Net cash provided by financing activities



4,744,515




3,074,081









Effect of foreign currency translation



(184,433)




701,027









Net increase in cash



18,349,532




10,522,055

Cash – beginning of period



9,037,550




17,460,034

Cash – end of period


$

27,387,082



$

27,982,089









Supplemental disclosures of cash flow information: 








Interest paid


$

691,212



$

41,693

Income taxes paid


$

548,175



$

3,024,287

SOURCE QKL Stores Inc.

Copyright 2012 PR Newswire



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