QKL Stores Inc. Announces First Quarter 2013 Financial Results -- 1Q13 Revenue Decreased 13.4% to $97.1 million from $112.0 million in 1Q12 -- -- 1Q13 Gross Profit Decreased 12.7% to $16.6 million from $19.1 million in 1Q12 -- PR Newswire DAQING, China, May 14, 2013 DAQING, China, May 14, 2013 /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, 2013. Mr. Zhuangyi Wang, Chairman and CEO, said, "We finished the first quarter operating a total of 46 stores, comprised of 28 supermarkets, 14 hypermarkets and 4 department stores. As our new store opening plan slows for 2013, the new stores are going to open particularly 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 2013 Financial Results Revenue in the first quarter of 2013 decreased by 13.4% to $97.1 million from $112.0 million in the first quarter of 2012. Revenue performance reflected the 45 comparable stores, which are stores that have been open for at least one year before the beginning of the comparison period, or by January 1, 2012, as well as sales from the net opening of one new store since January 1, 2012. Same-store sales were approximately $93.6 million in the first quarter of 2013, representing a decrease of 5.6% from $99.1 million in the first quarter of 2012. One new store opened since January 1, 2012 generated approximately $1.1 million in sales in the first quarter of 2013. Gross profit decreased by 12.7% year over year to $16.6 million, compared to $19.1 million in the prior year period. Gross margin for the first quarter of 2013 was 17.1%, compared to 17.0% for the first quarter of 2012. The decrease in gross profit was primarily attributable to a decrease in net sales of $14.9 million in the first quarter of 2013 compared to the first quarter of 2012. Operating expenses decreased by 9.5% to $15.8 million compared to $17.5 million in the prior year period. This was primarily a result of lower salary, and reduced other operating costs related to the Company's decreased store count over the past year. Operating income for the first quarter of 2013 decreased to $0.80 million, or 0.8% of sales, from $1.5 million, or 1.4% of sales, in the first quarter of 2012. First quarter 2013 net income was approximately $0.4 million, or $0.27 per diluted share, compared with $0.8 million, or $0.54 per diluted share, for the same period in 2012. As of March 31, 2013, the Company had $32.5 million in unrestricted cash with bank loans of $15.9 million, compared to $36.1 million as of March 31, 2012 with bank loans of $9.5 million. As of March 31, 2013, the Company operated 46 stores. The Company closed 2 stores in the first quarter of 2013 due to the expiration of the lease contracts. The number of weighted average shares outstanding used in the computation of diluted EPS was approximately 1,510,828 in the first quarter 2013. Net cash provided by operating activities for the 2013 first quarter was $24.3 million compared to $29.4 million in the prior year period. The decrease in cash provided by operating activities for the three months ended March 31, 2013 compared to the same period in 2012 primarily reflects the decrease in net sales for the three months ended March 31, 2013. Conference Call The Company will conduct a conference call to discuss its first quarter 2013 results on Tuesday, May 14, 2013 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 10014237. 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 (Financial Tables on Following Pages) QKL STORES INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets March 31, December 31, 2013 2012 (Unaudited) ASSETS Cash $ 32,459,219 $ 8,479,413 Restricted cash 253 253 Accounts receivable 371,160 796,897 Inventories 43,528,151 59,812,645 Other receivables 17,706,392 18,042,360 Prepaid expenses 9,366,871 11,083,708 Advances to suppliers 3,510,707 9,525,250 Deferred income tax assets 6,827,412 6,327,932 Total current assets 113,770,165 114,068,458 Property, plant and equipment, net 44,336,463 45,439,360 Land use rights, net 719,526 724,760 Goodwill - - Other assets 12,751 12,976 Total assets $ 158,838,905 $ 160,245,554 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term loans $ 15,919,511 $ 15,832,555 Accounts payable 25,779,751 30,900,586 Cash card and coupon liabilities 21,391,561 18,604,188 Customer deposits received 3,233,295 1,248,278 Accrued expenses and other payables 25,277,134 28,097,212 Income taxes payable 88,594 2,726 Total current liabilities 91,689,846 94,685,545 Total liabilities 91,689,846 94,685,545 Shareholders' equity Common stock, $0.001 par value per share, authorized 100,000,000 shares, issued and outstanding 1,522,326 and 1,443,948 shares 1,522 1,444 at March 31, 2013 and December 31, 2012* respectively Series A convertible preferred stock, par value $0.01, authorized 10,000,000 shares, issued and outstanding 529,412 and 2,386,110 5,294 23,861 shares at March 31, 2013 and December 31, 2012 respectively Additional paid-in capital 92,521,489 92,503,000 Retained earnings – appropriated 8,323,312 8,323,312 Retained earnings (47,438,438) (47,841,708) Accumulated other comprehensive income 13,735,880 12,550,100 Total shareholders' equity 67,149,059 65,560,009 Total liabilities and shareholders' equity $ 158,838,905 $ 160,245,554 *The number of shares of common stock has been retroactively restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. QKL STORES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) Three Months Ended March 31, 2013 2012 Net sales $ 97,057,191 $ 112,038,616 Cost of sales 80,417,743 92,983,490 Gross profit 16,639,448 19,055,126 Operating expenses: Selling expenses 13,324,213 15,130,888 General and administrative expenses 2,518,336 2,375,774 Total operating expenses 15,842,549 17,506,662 Income from operations 796,899 1,548,464 Non-operating expense: Interest income 193,573 26,528 Interest expense (297,608) (293,909) Total non-operating loss (104,035) (267,381) Income before income taxes 692,864 1,281,083 Income taxes 289,594 450,482 Net income 403,270 830,601 Comprehensive income statement: Net income 403,270 830,601 Foreign currency translation adjustment 1,185,780 862,477 Comprehensive income $ 1,589,050 $ 1,693,078 Basic earnings per share of common stock $ 0.27 $ 0.54 Diluted earnings per share $ 0.27 $ 0.54 Weighted average shares used in calculating net 1,476,735 1,306,025 income per ordinary share-- basic Weighted average shares used in calculating net 1,510,828 1,543,297 income per ordinary share-- diluted See notes to unaudited condensed consolidated financial statements. QKL STORES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 403,270 $ 830,601 Depreciation 1,678,164 1,641,431 Amortization 8,036 7,224 Share-based compensation 204,117 216,158 Deferred income tax (464,414) 304,196 Loss on disposal of fixed assets 25,491 6,137 Adjustments to reconcile net income to net cash provided by operating activities: Accounts receivable 429,824 11,978 Inventories 16,601,846 12,704,657 Other receivables 537,181 3,504,787 Prepaid expenses 1,776,872 1,229,951 Advances to suppliers 6,062,785 2,306,768 Accounts payable (5,286,996) (696,663) Cash card and coupon liabilities 2,683,392 1,257,931 Customer deposits received 1,976,833 (415,828) Accrued expenses and other payables (2,453,301) 6,507,064 Income taxes payable 85,795 (8,580) Net cash provided by operating activities 24,268,895 29,407,812 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (350,987) (827,585) Decrease of restricted cash - - Net cash used in investing activities (350,987) (827,585) CASH FLOWS FROM FINANCING ACTIVITIES: Bank loan repayment - (1,581,103) Net cash used in financing activities - (1,581,103) Effect of foreign currency translation 61,898 41,588 Net increase in cash 23,917,908 26,999,124 Cash-- beginning of period 8,479,413 9,037,550 Cash --end of period $ 32,459,219 $ 36,078,262 Supplemental disclosures of cash flow information: Interest paid $ 297,608 $ 293,909 Income taxes paid $ 203,799 $ 459,062 SOURCE QKL Stores Inc. Website: http://www.qklstoresinc.com
QKL Stores Inc. Announces First Quarter 2013 Financial Results
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