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)





Three months ended



Six months ended




June 30,



June 30,




2014



2013



2014



2013


NET SALES



$


85,667,780



$


59,129,485



$


191,682,949



$


137,440,975


COST OF SALES




56,317,989




39,650,917




136,552,201




97,669,484















GROSS PROFIT




29,349,791




19,478,568




55,130,748




39,771,491















OPERATING
EXPENSES














Selling expenses




14,402,662




9,898,106




30,525,958




21,749,402


General and
administrative expenses




7,539,418




5,513,105




13,934,406




9,985,552


Total Operating
Expenses




21,942,080




15,411,211




44,460,364




31,734,954















INCOME FROM
OPERATIONS




7,407,711




4,067,357




10,670,384




8,036,537















OTHER INCOME
(EXPENSES)














Interest income




336,414




342,188




577,747




637,790


Interest expense




(774,693)




(736,695)




(1,481,808)




(1,528,224)


Change in fair value of
derivative liability







2,000







294,000


Other income (expenses)




440,464




(179,098)




912,223




(147,641)


Total Other Income
(Expenses)




2,185




(571,605)




8,162




(744,075)















INCOME BEFORE
INCOME TAX
EXPENSE




7,409,896




3,495,752




10,678,546




7,292,462


INCOME TAX
EXPENSE




(1,879,752)




(768,541)




(2,758,674)




(1,478,172)















NET INCOME




5,530,144




2,727,211




7,919,872




5,814,290















OTHER
COMPREHENSIVE
(LOSS) INCOME














Foreign currency
translation (loss) gain




356,044




850,550




(343,382)




1,158,392


COMPREHENSIVE
INCOME



$


5,886,188



$


3,577,761



$


7,576,490



$


6,97