QKL Stores Inc. Announces Fourth Quarter and Full Year 2014 Financial Results

DAQING, China, April 15, 2015 /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 fourth quarter and full year financial results ended December 31, 2014.

Mr. Zhuangyi Wang, Chairman and CEO, said, "As QKL expands its market presence in northeast China, we are uniquely positioned against our local competitors through our large product offering, strong supplier relationships, efficient distribution network and state-of-the-art IT system.  We are comfortable with our opportunities in 2015 and believe we'll see an improvement in operating expenses and profit growth in coming quarters.

"In 2014, we closed one store and opened five stores. As of December 31, 2014, we operated 26 supermarkets, 18 hypermarkets, 4 department stores and 5 distribution centers situated in Daqing, Harbin Changchun and Jiamusi, respectively. 

As we advance into 2015, we expect to open two new supermarket or hypermarket stores this year. We maintain confidence in our strategy of strengthening our store presence in Tier 4 and 5 cities in northeastern China as well as in our core region of operation around Daqing where the majority of our older stores are based."

Fourth Quarter 2014 Financial Results

Revenue in the fourth quarter of 2014 increased by 12.3% to $75.8 million from $67.5 million in the fourth quarter of 2013. Comparable stores are stores that were opened for at least one year before the beginning of the comparison  period, or by October 1, 2013. Those 43 stores generated approximately $66.8 million in sales in the fourth quarter of 2014, representing a decrease of $0.2 million, or 0.3% compared with $67.0 million in sales in fiscal 2013. New store sales increased, reflecting the opening of five new stores since October 1, 2013. These stores generated approximately $9.0 million in sales in the fiscal 2014.

Gross profit increased by 10.4% year over year to $12.7 million, compared to $11.5 million in the prior year period. Gross profit as a percentage of revenue for the fourth quarter of 2014 was 16.8%, compared to 17.0% for the fourth quarter of 2013. The decrease was due to the increasing competition in the online shopping.

Operating expenses increased by 42.2% to $24.6 million compared to $17.3 million in the prior year period. This was primarily a result of our significant recognition of the preliminary expenses and related new stores expenses in the fourth quarter of 2014. We did not open any new store in fiscal 2013.

We had a net loss of $14.7 million in the fourth quarter of 2014 compared with net loss of $11.6 million in the fourth quarter of 2013.

Full Year 2014 Financial Results

Revenue decreased by $8.2 million, or 2.9%, to $274.6 million for fiscal 2014 from $282.8 million for fiscal 2013. The change in net sales was primarily attributable to the following: comparable stores are stores that were opened for at least one year before the beginning of the comparison period, or by January 1, 2013. Those 43 stores generated approximately $252.9 million sales in fiscal 2014, a decrease of $20.1 million, or 7.4% compared with $273.0 million sales in fiscal 2013. New store sales increased, reflecting the opening of five new stores since January 1, 2013. These stores generated approximately $19.0 million in sales in the fiscal 2014.

Gross profit, or total revenue minus cost of sales, was decreased by $2.0 million, or4.1%, to $46.4 million, or 16.9% of net sales, in fiscal 2014 from $48.4 million, or 17.1% of net sales, in fiscal 2013. The change in gross profit was primarily attributable to net sales decreased by $8.2 million in fiscal 2014 compared to fiscal 2013.

Selling expenses increased by $11.8 million, or 25.2%, to $58.7 million, or 21.4% of net sales, in fiscal 2014 from $46.9 million, or 16.6% of net sales, in fiscal 2013. The change in selling expense was mainly due to the increase in the new stores in 2014. In particular, we incurred $5.5 million of preliminary expense, and $4.4 million of other additional expenses, including salaries, depreciation rental, utility and advertising in fiscal 2014. We did not open any new store in fiscal 2013.

We had a net loss of $27.0 million in fiscal 2014 compared with net loss of $14.3 million in fiscal 2013. The number of shares used in the computation of diluted EPS increased by 0.2% to 1,522,326 shares in fiscal 2014 from 1,519,258 shares in fiscal 2013.

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.

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SOURCE QKL Stores Inc.