Ever-Glory International Group, Inc. reported sales surged nearly 45 percent in the second quarter ended June 30, 2014 on strong demand from western apparel brands and rapid growth at its own retailing business in mainland China.
The Nanjing, China-based apparel manufacturer and retailer reported sales reached $85.7 million, up 44.9 percent, from $59.1 million in the second quarter of last year.
Retail sales generated from the company's retail business for the quarter increased 53.6 percent to $49.3 million, compared to $32.1 million last year. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 1,055 retail stores as of June 30, compared to 831 retail stores a year earlier.
Wholesale sales generated from the company's wholesale business for the quarter increased 34.5 percent to $36.4 million, compared to $27.1 million last year. This increase was primarily attributable to increased sales in the People’s Republic of China, Germany, the United Kingdom and the United States.
Total gross profit for the quarter was $29.3 million, or 34.3 percent of total sales, compared to $19.5 million, or 32.9 percent of total sales last year.
Selling expenses for the quarter increased 45.5 percent to $14.4 million compared to $9.9 million last year. As a percentage of sales, selling expenses increased 10 basis points to 16.8 percent compared to 16.7 percent last year.
The increase was attributable to the increased average salaries, and increased number of stores, leading to increased numbers of retail employees, as well as the increased store decoration and marketing expenses associated with the promotion of the retail brand.
General and administrative expenses for the quarter increased 36.8 percent to $7.5 million compared to $5.5 million last year. The increase was attributable to an increase in payroll for additional management and design and marketing staff as a result of our business expansion. As a percentage of total sales, general and administrative expenses decreased 50 basis points to 8.8 percent compared to 9.3 percent last year. The percentage decrease was attributable to the increase in our sales.
Income from operations for the quarter increased 82.1 percent to $7.4 million compared to $4.1 million last year. As a percentage of sales, income from operations accounted for 8.6 percent of our total sales for the quarter, an increase of 1.7 percent compared to 6.9 percent last year as a result of increasing gross profit.
Net income for the quarter increased 102.8 percent to $5.5 million compared to $2.7 million last year. Basic and diluted earnings per share were $0.37 and $0.18 for the three months ended June 30, 2014 and 2013, respectively.
Balance Sheet and Cash Flow As of June 30, 2014, Ever-Glory had approximately $25.0 million of cash and cash equivalents, compared to approximately $27.8 million as of December 31, 2013. Ever-Glory had working capital of approximately $38.8 million as of June 30, 2014, and outstanding bank loans of approximately $55.4 million as of June 30, 2014.
Business Outlook For the third quarter of 2014, Every-Glory anticipates total net sales in the range of $110 to $130 million and net income in the range of $3 to $4 million. For full year 2014, Every-Glory anticipates total net sales in the range of $420 to $470 million and net income in the range of $11 to $17 million.
The full year revenue forecast is comprised of $160 to $180 million in anticipated wholesale revenue and $260 to $290 million in anticipated revenue from retail operations.
Nanjing-based Ever-Glory was the first Chinese apparel company listed on the American Stock Exchange. It maintains global strategic partnerships in Europe, the United States, Japan and China, conducting business with several well-known brands and retail chain stores. In addition, Ever-Glory operates its own domestic chain of retail stores known as “La Go Go.”
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 (UNAUDITED)
