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.