QKL Stores Inc. Announces Third Quarter 2012 Financial Results

        QKL Stores Inc. Announces Third Quarter 2012 Financial Results

-- 3Q12 Revenue increased by 2.8% to $84.3 million from $82.1 million in 3Q11
--

-- 3Q12 Gross Profit decreased by 0.3% to $14.15 million from $14.19 million
in 3Q11 --

PR Newswire

DAQING, China, Nov. 14, 2012

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, ournet loss was $1.1 million,
or $(0.105) per diluted share, comparedto $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                                                 10-800-120-2304
Free:
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,  December 31,

                                               2012            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    10,527          10,448
at September 30, 2012 and December 31, 2011,
respectively*
Series A convertible preferred stock, par
value $0.01, authorized 10,000,000 shares,
issued and outstanding 5,457,960 and             54,580          56,945
5,694,549at September 30, 2012 and December
31, 2011, respectively
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                    Nine Months

                                                                         Ended September 30,             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
Generalandadministrativeexpenses    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
Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:
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.

Website: http://www.qklstoresinc.com
 
Press spacebar to pause and continue. Press esc to stop.