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Ever-Glory Reports Second Quarter 2019 Financial Results

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NANJING, China, Aug. 14, 2019 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NASDAQ:EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, reported its financial results today for the second quarter ended June 30, 2019.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the second quarter, we maintained our focus on developing the retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio and enhancing our account receivables."

"During the second quarter of 2019, our retail brands continue to attract new customers and retain existing customers by focusing on design, quality and value," Mr. Kang continued. "Following the remodeling or relocation of 39 stores during 2019, we operated a nationwide network of 1,235 stores as of June 30, 2019."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in our account receivables collection. We believe the enduring strength of our wholesale business will support its long-term profitability." concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The second quarter results, are coupled with our ability to increase operating leverage. Going forward, we remain confident in the long-term prospects of our business and we will continue implementing our margin enhancement and cost control measures to further strengthen the profitability of our business."

Second Quarter 2019 Financial Results 

Total sales for the second quarter of 2019 were $77.3 million, a decrease of 12.7% from $88.5 million in the second quarter of 2018. This decrease was primarily driven by an 19.4% decrease in our retail business and a 4.0% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 19.4% to $40.1 million for the second quarter of 2019, compared with $49.7 million for the second quarter of 2018. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 1,235 retail stores as of June 30, 2019, compared with 1,417 retail stores as of June 30, 2018.

Sales for the Company's wholesale division decreased by 4.0% to $37.3 million for the second quarter of 2019, compared with $38.8 million for the second quarter of 2018. This decrease was primarily attributable to decreased sales in Mainland China, Hong Kong China, Japan, Germany, United Kingdom and other European markets partially offset for increased sales in the United States.

Total gross profit for the second quarter of 2019 decreased by 16.1% to $29.0 million, compared with $34.5 million for the second quarter of 2018. Total gross margin decreased to 37.5% from 39.0% for the second quarter of 2018.

Gross profit for the retail business decreased by 16.1% to $23.0 million for the second quarter of 2019, compared with $27.4 million for the second quarter of 2018. Gross margin was 57.3%, compared to 55.1% for the second quarter of 2018.

Gross profit for the wholesale business decreased by 16.0% to $6.0 million for the second quarter of 2019, compared with $7.2 million for the second quarter of 2018. Gross margin decreased to 16.1% from 18.4% for the second quarter of 2018.

Selling expenses for the second quarter of 2019 decreased by 12.8% to $19.7 million, or 25.5% of total sales, compared with $22.6 million, or 25.5% of total sales for the second quarter of 2018. The decrease was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the second quarter of 2019 decreased by 16.8% to $7.3 million, or 9.5% of total sales, compared with $8.8 million, or 10.0% of total sales for the second quarter of 2018. The decrease was mainly attributable to the decline in number of stores.

Income from operations for the second quarter of 2019 decreased by 37.7% to $2.0 million compared with $3.1 million for the second quarter of 2018.

Net income attributable to the Company for the second quarter of 2019 was $1.9 million compared with $2.8 million for the second quarter of 2018. Basic and diluted earnings per share were $0.13 for the second quarter of 2019 compared with $0.19 for the second quarter of 2018.

Balance Sheet

As of June 30, 2019, Ever-Glory had approximately $34.5 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $42.6 million as of June 30, 2019, and outstanding bank loans of approximately $26.0 million as of June 30, 2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2019 (8:00 p.m. Beijing Time on August 14, 2019). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 5902045. 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 August 14 through 11:59 p.m. Eastern Time on August 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 5902045.

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.

Forward-Looking Statements

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.

For investor and media inquiries, please contact:

Ever-Glory International Group
Dandan Song
Tel: +86-25-5209-6817
E-Mail: sdd@ever-glory.com.cn

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

AS OF JUNE 30, 2019 AND DECEMBER 31, 2018 (UNAUDITED)




2019



2018


ASSETS







CURRENT ASSETS







Cash and cash equivalents


$

34,526



$

47,012


Accounts receivable, net



64,704




86,527


Inventories



63,127




65,929


Advances on inventory purchases



8,754




6,420


Value added tax receivable



3,102




2,580


Other receivables and prepaid expenses



6,648




10,204


Amounts due from related parties



144




192


Total Current Assets



181,005




218,864








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