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Ever-Glory Reports Third Quarter 2016 Financial Results
Add: 2016 Update: 2016/11/15
NANJING,China, Nov.14, 2016 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, today reported its financial results for the third quarter ended September 30, 2016.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said,"While our overall business continued to be impacted by the lackluster macroeconomic environment in the third quarter, the tough operating environment did not slow us from continuing to execute our strategic initiatives with a keen focus on building a long-term sustainable business. In addition, our two complementary segments, retail and wholesale, provide us formidable competitive advantages in the market with deep insight into local fashion buying behaviors and changing retail trends and valuable experience and resources across every aspect of supply chain management.
"For our retail business, we remain focused on store network optimization, inventory and operation management and branding. As of September 30, 2016, we operated a nationwide network of 1,345 stores by adding a net total of 70 stores during the third quarter and expect to have over 1,400 stores at the end of this year.
"The global macroeconomic headwinds and weak consumer confidence continued to impact our wholesale business in the third quarter, however, we believe our extensive product development and supply chain management expertise, as well as network of high quality, reliable and cost-efficient sourcing channels and manufacturers will benefit the long-term foundation of our wholesale business.In addition, despite the lower sales in Japan, the United Kingdom and Mainland China, we are pleased to record higher sales in Hong Kong, other European areas and the United States in the third quarter," concluded Mr. Kang.
Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "During the soft market conditions of the third quarter, we are pleased that our business foundation remains solid. We have been diligently executing our strategic initiatives and have made important progress. In the third quarter, despite the decreased total sales, we maintained the gross margin for retail business at the same level compared with the year-ago period while improving the gross margin for wholesale business by 70 basis points,mainly due to our effective procurement system and lower cotton prices.While we expect the remainder of 2016 to remain challenging, we will continue implementing our margin enhancement and cost control measures to further strengthen the foundation of our business."
Third Quarter 2016 Financial Results
Total sales for the third quarter of 2016 were $109.9 million, a decrease of 7.3% from $118.6 million in the third quarter of 2015. This decrease was primarily driven by a 3.4% decrease in our wholesale business and a 13.2% decrease in retail business.
Sales for the Company's branded fashion apparel retail division decreased by 13.2% to $41.1 million for the third quarter of 2016,compared with $47.3 million for the third quarter of 2015.This decrease was primarily due to a decrease in same-store sales. The Company had 1,345 retail stores as of September 30, 2016, compared with 1,188 retail stores as of September 30, 2015.
Sales for the Company's wholesale division decreased by 3.4% to $68.9 million for the third quarter of 2016, compared with $71.3 million for the third quarter of 2015.This decrease was primarily due to a decrease in sales in Japan, the United Kingdom and Mainland China, partially offset by an increase in sales in Hong Kong, Germany, Europe-Other and the United States.
Total gross profit for the third quarter of 2016 decreased by 8.4% to $29.6 million, compared with $32.3 million for the third quarter of 2015.Total gross margin decreased to 26.9% from 27.3% for the third quarter of 2015.
Gross profit for the retail business decreased by 12.9% to $19.6 million for the third quarter of 2016, compared with $22.4 million for the third quarter of 2015. Gross margin increased to 47.6% from 47.5% for the third quarter of 2015.
Gross profit for the wholesale business increased by 1.6% to $10.1 million for the third quarter of 2016, compared with $9.9 million for the third quarter of 2015. Gross margin increased to 14.6% from 13.9% for the third quarter of 2015.
Selling expenses for the third quarter of 2016 decreased by 3.5% to $18.5 million, or 16.8% of total sales, compared with $19.2 million, or 16.2% of total sales for the third quarter of 2015. This decrease was attributable to lower retail sales and decreased store management expense.
General and administrative expenses for the third quarter of 2016 increased by 5.7% to $9.9 million, or 9.0% of total sales, compared with $9.3 million, or 7.9% of total sales for the third quarter of 2015. The increase was attributable to an increase of $1.9 million for bad-debt expense for the three months ended September 30, 2016 compared with the three months ended September 30, 2015.
Income from operations for the third quarter of 2016 decreased by 67.7% to $1.2 million compared with $3.8 million for the third quarter of 2015.
Net income attributable to the Company for the third quarter of 2016 was $0.4 million compared with $2.7 million for the third quarter of 2015. Basic and diluted earnings per share were $0.04 for the third quarter of 2016 compared with $0.19 for the third quarter of 2015.
As of September 30, 2016, Ever-Glory had approximately $38.3 million of cash and cash equivalents, compared with approximately $22.7 million as of December 31, 2015. Ever-Glory had working capital of approximately $51.6 million as of September 30, 2016, and outstanding bank loans of approximately $49.8 million as of September 30, 2016.
The Company will hold a conference call at 8:00 a.m. Eastern Time on November 14,2016 (9:00 p.m. Beijing Time on November 14, 2016). Listeners can access the conference call by dialing +1-888-539-3624 or +1-719-457-2552 and using the access code 6572776. The conference call will also be webcast live over the Internet and can be accessed at the Company's website at http://www.everglorygroup.com.
A replay of the conference call will be available from 11:00 a.m. Eastern Time on November 14 through 11:59 p.m. Eastern Time on November 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 6572776.
About Ever-Glory International Group, Inc.
Based in Nanjing, China, Ever-Glory International Group, Inc. is a retailer of branded fashion apparel and a leading global apparel supply chain solution provider. Ever-Glory is the first Chinese apparel Company listed on the American Stock Exchange (now named as NYSE MKT) in July 2008 and then transferred to The NASDAQ Global Market on December 31, 2015. Ever-Glory offers apparel to woman in China under its own brands "La go go", "Velwin", "Sea To Sky" and "idole". Ever-Glory is also a leading global apparel supply chain solution provider with a focus on middle-to-high end casual wear, outerwear, and sportswear brands. Ever-Glory services a number of well-known brands and retail stores by providing a complete set of supply chain management services, including: fabric development and design, sampling, sourcing, quality control, manufacturing, logistics, customs clearance and distribution.
Certain statements in this release and other written or oral statements made by or on behalf of Ever-Glory International Group, Inc. (the "Company") are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and the Company's 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, without limitation, market acceptance of the Company's products and offerings, development and expansion of the Company's wholesale and retail operations, the Company's continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves (including, without limitation, the results stemming from the future implementation of the Company's strategies and the revenue, net income and new retail store projections set forth herein) may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties (many of which are beyond the Company's control). These statements are based on management's current expectations and speak only as of the date of such statements. Readers should carefully review the risks and uncertainties described in the Company's latest Annual Report on Form 10-K and other documents that the Company files from time to time with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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