DAQING, China, Nov. 13, 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 third
quarter ended September 30, 2014.
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 two stores before year end. 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.
"The retailing business environment is still
challenging, mainly due to
rising costs and emerging e-commerce channels. However, we are still confident in domestic
needs; because of the urbanization
of third- and fourth-tier cities we will achieve a fundamental improvement in
consumer purchasing power during
the process.
"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 2013 Financial
Results
Revenue in the third quarter of 2014 increased by $1.9 million, or 3.2%, to $61.1 million for the three months ended
September 30, 2014 from $59.2 million for the three months ended
September 30, 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 (44 stores) sales generated approximately
$56.2 million in sales in the third
quarter of 2014, a decrease of $1.5
million, or 2.6%, compared
with $57.7 million in net sales in
the third quarter of 2013. New store sales increased, reflecting
the opening of three new stores since January 1, 2013. These stores generated
approximately $4.3 million in sales
in the third quarter of 2014. The number of stores including
supermarkets/hypermarkets and department stores at September 30, 2014 was 47 versus 45 at
September 30, 2013.
Gross profit increased by $0.1
million, or 1.4%, to $10.3
million, or 16.8% of net sales, in the third quarter of 2014
from $10.1 million, or 17.1% of net
sales, in the third quarter of 2013. The change in gross profit was
primarily attributable to an increase in net sales of $1.9 million and an increase in cost of sales of
$1.7 million in the third quarter of
2014 compared to the third quarter of 2013.
Selling expenses increased by
$3.0
million, or 30.2%, to $13.1
million, or 21.4% of net sales, in the third quarter of 2014,
from $10.0 million, or 16.9% of net
sales, in the third quarter of 2013. The increase in selling
expenses relative to net sales was due to the realizing of significant
preliminary expenses of new stores opening of $1.8 million in the three months ended
September 30, 2014 compared to nil in
the same period in 2013.
General and administrative expenses decreased by $0.1 million, or 3.5%, to $2.0 million, or 3.3% of net sales, in the third
quarter of 2014 from $2.1 million, or
3.5% of net sales, in the third quarter of 2013. There is no
significant change to our general and administrative expense.
For the three months ended September 30,
2014, our net loss was $5.5
million, or $(3.60) per
diluted share, compared to net loss of $1.7 million, or ($1.11) per diluted share, for the three months
ended September 30, 2013. The number
of shares used in the computation of diluted EPS was 1,522,326 for
the third quarter of 2014 and 2013.
Conference Call
Management will host a conference call at 8:30 am ET on Friday,
November 14th. To participate, please dial one of the local
access numbers, listed below. The conference call identification
number is 10017432.
Participant Dial In
(Toll Free):
|
1-877-870-4263
|
Participant
International:
|
1-412-317-0790
|
Canadian Dial In
(Toll Free):
|
1-855-669-9657
|
China (N) Toll
Free:
|
4001-201213
|
China (S) Toll
Free:
|
4001-201213
|
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
QKL STORES INC.
AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
|
|
|
September
30,
2014
|
|
December 31,
2013
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
42,605,679
|
|
$
|
9,245,212
|
Restricted
cash
|
|
|
8,609,740
|
|
|
8,668,882
|
Accounts
receivable
|
|
|
320,570
|
|
|
557,745
|
Inventories
|
|
|
47,453,891
|
|
|
64,724,923
|
Other
receivables
|
|
|
19,231,805
|
|
|
21,979,152
|
Prepaid
expenses
|
|
|
6,933,867
|
|
|
9,915,479
|
Advances to
suppliers
|
|
|
4,942,444
|
|
|
7,822,660
|
Income taxes
receivables
|
|
|
1,695,685
|
|
|
1,739,773
|
Deferred income tax
assets – current portion
|
|
|
2,778,076
|
|
|
2,788,918
|
Total current
assets
|
|
|
134,571,757
|
|
|
127,442,744
|
Property, plant and
equipment, net
|
|
|
38,109,472
|
|
|
40,247,576
|
Land use rights,
net
|
|
|
698,756
|
|
|
718,337
|
Deferred income tax
assets – non-current portion
|
|
|
66,956
|
|
|
66,956
|
Other assets
|
|
|
17,276
|
|
|
17,276
|
Total assets
|
|
$
|
173,464,217
|
|
$
|
168,492,889
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Short-term
loans
|
|
$
|
60,103,964
|
|
$
|
40,889,761
|
Accounts
payable
|
|
|
33,991,621
|
|
|
35,840,964
|
Cash card and coupon
liabilities
|
|
|
18,045,922
|
|
|
18,465,030
|
Customer deposits
received
|
|
|
977,804
|
|
|
984,308
|
Accrued expenses and
other payables
|
|
|
18,910,586
|
|
|
18,827,472
|
Total current
liabilities
|
|
|
132,029,897
|
|
|
115,007,535
|
Total
liabilities
|
|
|
132,029,897
|
|
|
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 September 30, 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 September 30, 2014 and
December 31, 2013
|
|
|
5,294
|
|
|
5,294
|
Additional paid-in
capital
|
|
|
93,644,266
|
|
|
93,337,957
|
Retained earnings –
appropriated
|
|
|
8,329,586
|
|
|
8,329,586
|
Retained
earnings
|
|
|
(74,446,030)
|
|
|
(62,145,794)
|
Accumulated other
comprehensive income
|
|
|
13,899,682
|
|
|
13,956,789
|
Total shareholders'
equity
|
|
|
41,434,320
|
|
|
53,485,354
|
Total liabilities and
shareholders' equity
|
|
$
|
$173,464,217
|
|
$
|
168,492,889
|
QKL STORES INC.
AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Income
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net sales
|
|
$
|
61,121,016
|
|
$
|
59,243,560
|
|
$
|
198,809,303
|
|
$
|
215,296,669
|
Cost of
sales
|
|
|
50,855,098
|
|
|
49,118,005
|
|
|
165,124,579
|
|
|
178,397,763
|
Gross profit
|
|
|
10,265,918
|
|
|
10,125,555
|
|
|
33,684,724
|
|
|
36,898,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
13,062,967
|
|
|
10,031,669
|
|
|
35,800,120
|
|
|
33,235,756
|
General and
administrative expenses
|
|
|
2,022,426
|
|
|
2,095,044
|
|
|
7,219,674
|
|
|
6,693,516
|
Total operating
expenses
|
|
|
15,085,393
|
|
|
12,126,713
|
|
|
43,019,794
|
|
|
39,929,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(4,819,475)
|
|
|
(2,001,158)
|
|
|
(9,335,070)
|
|
|
(3,030,366)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
241,800
|
|
|
190,224
|
|
|
726,416
|
|
|
645,788
|
Interest
expense
|
|
|
(891,855)
|
|
|
(349,665)
|
|
|
(3,670,486)
|
|
|
(873,553)
|
Total non-operating
expense
|
|
|
(650,055)
|
|
|
(159,441)
|
|
|
(2,944,070)
|
|
|
(227,765)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(5,469,530)
|
|
|
(2,160,599)
|
|
|
(12,279,140)
|
|
|
(3,258,131)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
11,357
|
|
|
(468,392)
|
|
|
21,096
|
|
|
(514,983)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(5,480,887)
|
|
$
|
(1,692,207)
|
|
$
|
(12,300,236)
|
|
$
|
(2,743,148)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,480,887)
|
|
$
|
(1,692,207)
|
|
$
|
(12,300,236)
|
|
$
|
(2,743,148)
|
Foreign currency
translation adjustment
|
|
|
675,064
|
|
|
954,945
|
|
|
(57,107)
|
|
|
2,587,998
|
Comprehensive
loss
|
|
$
|
(4,805,823)
|
|
$
|
(737,262)
|
|
$
|
(12,357,343)
|
|
$
|
(155,150)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1,522,326
|
|
|
1,522,326
|
|
|
1,522,326
|
|
|
1,555,978
|
Diluted
|
|
|
1,522,326
|
|
|
1,522,326
|
|
|
1,522,326
|
|
|
1,555,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(3.60)
|
|
$
|
(1.11)
|
|
$
|
(8.08)
|
|
$
|
(1.76)
|
Diluted
|
|
$
|
(3.60)
|
|
$
|
(1.11)
|
|
$
|
(8.08)
|
|
$
|
(1.76)
|
QKL STORES INC.
AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
(Unaudited)
|
|
|
Nine Months
Ended September 30,
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(12,300,236)
|
|
$
|
(2,743,148)
|
Depreciation
|
|
|
5,084,837
|
|
|
5,034,492
|
Amortization
|
|
|
24,173
|
|
|
24,361
|
Share-based
compensation
|
|
|
306,309
|
|
|
612,351
|
Deferred income
tax
|
|
|
(8,770)
|
|
|
880,073
|
Loss on disposal of
fixed assets
|
|
|
-
|
|
|
25,755
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
233,589
|
|
|
23,117
|
Inventories
|
|
|
16,845,228
|
|
|
20,708,613
|
Other
receivables
|
|
|
2,599,829
|
|
|
523,424
|
Prepaid
expenses
|
|
|
2,916,696
|
|
|
1,963,042
|
Advances to
suppliers
|
|
|
2,829,497
|
|
|
4,947,618
|
Accounts
payable
|
|
|
(1,606,320)
|
|
|
(3,428,459)
|
Cash card and coupon
liabilities
|
|
|
(293,403)
|
|
|
1,748,812
|
Customer deposits
received
|
|
|
212
|
|
|
(234,533)
|
Accrued expenses and
other payables
|
|
|
211,765
|
|
|
(3,819,724)
|
Income taxes
payable
|
|
|
32,248
|
|
|
20,408
|
Net cash provided by
operating activities
|
|
|
16,875,654
|
|
|
26,286,202
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
|
(3,229,057)
|
|
|
(787,373)
|
Net cash used in
investing activities
|
|
|
(3,229,057)
|
|
|
(787,373)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Bank loan
borrowing
|
|
|
35,771,021
|
|
|
11,251,270
|
Bank loan
repayment
|
|
|
(16,259,555)
|
|
|
(16,073,243)
|
Net cash provided by
(used in) financing activities
|
|
|
19,511,466
|
|
|
(4,821,973)
|
|
|
|
|
|
|
|
Effect of foreign
currency translation
|
|
|
202,404
|
|
|
457,364
|
|
|
|
|
|
|
|
Net increase in
cash
|
|
|
33,360,467
|
|
|
21,134,220
|
Cash – beginning of
period
|
|
|
9,245,212
|
|
|
8,479,413
|
Cash – end of
period
|
|
$
|
42,605,679
|
|
$
|
29,613,633
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
3,670,486
|
|
$
|
873,553
|
Income taxes
paid
|
|
$
|
65,184
|
|
$
|
205,905
|
SOURCE QKL Stores Inc.