QKL Stores Inc. Announces First Quarter 2014 Financial Results - KFVS12 News & Weather Cape Girardeau, Carbondale, Poplar Bluff

QKL Stores Inc. Announces First Quarter 2014 Financial Results

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SOURCE QKL Stores Inc.

-- 1Q14 Revenue Decreased by 11.4% to $86.0 million from $97.1 million in 1Q13 --

-- 1Q14 Gross Profit Decreased by 12.0% to $14.7 million from $16.6 million in 1Q13 -

DAQING, China, May 15, 2014 /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, 2014.

Mr. Zhuangyi Wang, Chairman and CEO, said, "We opened two hypermarkets in the first quarter, and finished the first quarter operating a total of 47 stores, comprised of 27 supermarkets, 16 hypermarkets and 4 department stores. As our new store opening plan slows for 2014, 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 2014 Financial Results

Revenue decreased by $11.1 million, or 11.4%, to $86.0 million for the three months ended March 31, 2014 from $97.1 million for the three months ended March 31, 2013. 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, 2013. Same store (45 stores) sales generated approximately $81.8 million in sales in the first quarter of 2014, a decrease of $12.6 million, or 13.3% compared with $94.4 million in net sales in the first quarter of 2013. New store sales increased, reflecting the opening of two new stores since January 1, 2013. The stores generated approximately $4.2 million in sales in the first quarter of 2014. The number of stores including supermarkets/hypermarkets and department stores at March 31, 2014 was 47 versus 46 at March 31, 2013.

Gross profit decreased by $1.9 million, or 12.0%, to $14.7 million, or 17.1% of net sales, in the first quarter of 2014 from $16.6 million, or 17.1% of net sales, in the first quarter of 2013. The change in gross profit was primarily attributable to a decrease in net sales of $11.1 million in the first quarter of 2014 compared to the first quarter of 2013. We believe that our gross margin is likely to be between 16.8% and 17.3%, over the next few business quarters. New stores tend to be less profitable during their early months of operation. In addition, China's retail industry in general, and its supermarket industry in particular, are becoming more competitive every year. 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 were $13.3 million, or 15.4% of net sales, in the first quarter of 2014, and $13.3 million, or 13.7% of net sales, in the first quarter of 2013. The change in selling expenses was immaterial in the three months ended March 31, 2014 compared to the same period in 2013.

Our net loss for the first three months of 2014 was $3.1 million, or $2.01 per diluted share, from net income of $0.4 million, or $0.27 per diluted share in the prior year period. The number of shares used in the computation of diluted EPS was 1,522,326 and 1,510,828 for the first three months of 2014 and 2013, respectively.

At March 31, 2014, we had $30.2 million of cash compared to $32.5 million at March 31, 2013.

Conference Call

The Company will conduct a conference call to discuss its first quarter 2014 results on Thursday, May 15, 2014 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, 
2014



December 31,
2013




(Unaudited)





ASSETS









Cash


$

30,202,971



$

9,245,212


Restricted cash



8,598,008




8,668,882


Accounts receivable



313,906




557,745


Inventories



53,880,184




64,724,923


Other receivables



19,562,646




21,979,152


Prepaid expenses



6,315,204




9,915,479


Advances to suppliers



5,589,121




7,822,660


Income taxes receivables



1,725,573




1,739,773


Deferred income tax assets – current portion



2,765,569




2,788,918


Total current assets



128,953,182




127,442,744


Property, plant and equipment, net



38,365,069




40,247,576


Land use rights, net



705,134




718,337


Deferred income tax assets – non-current portion



66,956




66,956


Other assets



17,168




17,276


Total assets


$

168,107,509



$

168,492,889


LIABILITIES AND SHAREHOLDERS' EQUITY









Short-term loans


$

43,799,883



$

40,889,761


Accounts payable



30,898,432




35,840,964


Cash card and coupon liabilities



22,634,708




18,465,030


Customer deposits received



656,549




984,308


Accrued expenses and other payables



20,340,192




18,827,472


Total current liabilities



118,329,764




115,007,535


Total liabilities



118,329,764




115,007,535











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, 2014 and December 31, 2013



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, 2014 and December 31, 2013



5,294




5,294


Additional paid-in capital



93,439,972




93,337,957


Retained earnings – appropriated



8,329,586




8,329,586


Retained earnings



(65,202,245)




(62,145,794)


Accumulated other comprehensive income



13,203,616




13,956,789


Total shareholders' equity



49,777,745




53,485,354


Total liabilities and shareholders' equity


$

168,107,509



$

168,492,889


 

 


QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

 




(Unaudited)




Three Months Ended March 31,




2014



2013









Net sales


$

86,032,676



$

97,057,191


Cost of sales



71,300,517




80,417,743


Gross profit



14,732,159




16,639,448











Operating expenses:









Selling expenses



13,280,183




13,324,213


General and administrative expenses



3,233,410




2,518,336


Total operating loss



16,513,593




15,842,549











(Loss) income from operations



(1,781,434)




796,899




















Non-operating expense:









Interest income



230,098




193,573


Interest expense



(1,499,243)




(297,608)


Total non-operating loss



(1,269,145)




(104,035)











(Loss) income before income taxes



(3,050,579)




692,864











Income taxes



5,872




289,594











Net (loss) income



(3,056,451)




403,270











Comprehensive income statement:









Net (loss) income



(3,056,451)




403,270


Foreign currency translation adjustment



(753,173)




1,185,780


Comprehensive (loss) income


$

(3,809,624)



$

1,589,050





























Basic (loss) earnings per share of common stock


$

(2.01)



$

0.27


Diluted (loss) earnings per share


$

(2.01)



$

0.27











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



1,522,326




1,476,735


Weighted average shares used in calculating (loss) earnings per common stock – diluted



1,522,326




1,510,828


 

QKL STORES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

 




(Unaudited)




Three Months Ended March 31,




2014



2013


CASH FLOWS FROM OPERATING ACTIVITIES:









Net (loss) income


$

(3,056,451)



$

403,270


Depreciation



1,646,376




1,678,164


Amortization



7,383




8,036


Share-based compensation



102,014




204,117


Deferred income tax



-




(464,414)


Loss on disposal of fixed assets



-




25,491


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









Accounts receivable



241,021




429,824


Inventories



10,390,643




16,601,846


Other receivables



2,167,725




537,181


Prepaid expenses



3,544,791




1,776,872


Advances to suppliers



2,185,374




6,062,785


Accounts payable



(4,683,343)




(5,286,996)


Cash card and coupon liabilities



4,352,101




2,683,392


Customer deposits received



(322,039 )




1,976,833


Accrued expenses and other payables



1,423,767




(2,453,301)


Income taxes payable



(25)




85,795


Net cash provided by operating activities



17,999,337




24,268,895











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchases of property, plant and equipment



(81,623)




(350,987)


Net cash used in investing activities



(81,623)




(350,987)











CASH FLOWS FROM FINANCING ACTIVITIES:









Bank loan borrowing



3,268,054




-


Net cash used in financing activities



3,268,054




-











Effect of foreign currency translation



(228,009)




61,898











Net increase in cash



21,185,768




23,917,908


Cash – beginning of period



9,245,212




8,479,413


Cash – end of period


$

30,202,971



$

32,459,219











Supplemental disclosures of cash flow information:









Interest paid


$

1,499,243



$

297,608


Income taxes paid


$

5,847



$

203,799











©2012 PR Newswire. All Rights Reserved.

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