Welcome!

Agile Computing Authors: Pat Romanski, Elizabeth White, Yeshim Deniz, Liz McMillan, Larry Alton

News Feed Item

China Nepstar Chain Drugstore Reports Third Quarter 2012 Financial Results

- Same Store Sales Increased by 12.8% -

SHENZHEN, China, Nov. 28, 2012 /PRNewswire-FirstCall/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or the "Company"), the largest retail drugstore chain in China based on the number of directly operated stores, today announced its unaudited financial results for the third quarter ended September 30, 2012.

Financial Highlights

For the quarter ended September 30, 2012:

  • Revenue increased by 4.3% to RMB634.6 million (US$101.0 million), compared to RMB608.6 million in the third quarter 2011
  • Same store sales increased by 12.8% over the same period of 2011
  • Income from operations was RMB4.2 million (US$0.7 million), compared to RMB3.0 million in the third quarter 2011
  • Net income was RMB1.9 million (US$0.3million), compared to RMB1.2 million in the third quarter 2011

Mr. Fuxiang Zhang, Chief Executive Officer, commented, "Despite a reduction in the number of our stores, we continue to see growth in our total revenue and same store sales, which had been driven by our proactive sales and marketing campaigns and by optimizing our product offerings. After a modest growth of 10% in the second quarter, our pharmaceutical categories, prescription and over-the-counter ("OTC") drugs, together, grew over 19% during the third quarter on the same store basis, year over year.

"Store productivity and profitability remain our top priorities as we strive to strengthen our competitiveness and maintain leadership position in the market. During the third quarter, we attempted to expand market share in certain regions through more intense sales promotions, which temporarily adversely affected our gross margin. However, we believe that our strategy will pay off in a long run as we have already seen a moderate growth in number of customers' visits to our stores for two consecutive quarters on the same store basis, year on year."

Third Quarter Results

During the third quarter of 2012, the Company opened 11 new stores and closed 77 underperforming stores that show no signs of turning around. As of September 30, 2012, Nepstar had a total of 2,191 stores in operation.

Revenue for the quarter ended September 30, 2012 increased by 4.3% to RMB634.6 million (US$101.0 million), compared to RMB608.6 million for the same period in 2011.

Same store sales (for 2,088 stores opened before December 31, 2010) for the third quarter of 2012 increased by 12.8% compared to the same period in 2011. This growth was mainly attributable to a more than 19% increase in the sales of pharmaceutical products on the same store basis year over year as a result of the company's successful proactive marketing campaign and the closure of underperforming stores during the quarter.

Third quarter revenue contribution from prescription drugs was 18.9%, OTC drugs was 39.6%, nutritional supplements was 15.9%, traditional Chinese herbal products was 3.5% and convenience and other products was 22.1%.

Nepstar's portfolio of private label products included 1,977 products as of September 30, 2012. Sales of private label products represented approximately 26.7% of revenue and contributed 38.2% of gross profit for the third quarter of 2012. This compares to approximately 30.9% of revenue contribution and 43.2% of gross profit contribution by private label products during the same period of 2011. The decline of private label products' contribution to revenue and gross profit was mainly due to the introduction of more locally procured pharmaceutical products as a response to local customer demand.

Third quarter gross profit was RMB293.0 million (US$46.6 million), compared to RMB289.3 million for the same period of 2011. Gross profit margin in the third quarter of 2012 was 46.2%, compared to 47.5% for the same period of 2011. The decrease in gross profit margin was mainly due to the proactive  sales promotion across all product categories during the quarter.

Sales, marketing and other operating expenses as a percentage of revenue in the third quarter of 2012 decreased to 40.1% from 42.6% in the same period of 2011. The decrease was primarily due to the growth in same store sales and closure of underperforming stores.

General and administrative expenses as a percentage of revenue in the third quarter of 2012 were 5.0%, compared to 4.2% for the same period of 2011. The increase was mainly due to higher labor cost reflecting the inflationary economic environment.

Impairment loss of RMB3.0 million (US$0.5 million) was recognized in the third quarter of 2012, compared to RMB1.0 million in the same period of 2011. The impairment loss represented the reduction to the carrying amount of the property and equipment of certain underperforming stores, some of which will be closed in the 4th quarter of 2012.

As a result of the factors discussed above, income from operations in the third quarter of 2012 was RMB4.2 million (US$0.7 million), compared to RMB3.0 million in the same period of 2011.

Interest income for the third quarter of 2012 was RMB3.6 million (US$0.6 million), compared to RMB6.1 million for the same period of 2011. Interest income decreased as a result of reduced cash balance after distribution of a special dividend in the second quarter of this year.

Dividend income from cost method investments was nil for the third quarter of 2012, compared to RMB0.7 million for the same period of 2011. Equity in income of an equity method investee was RMB0.3 million (US$0.05 million) for the third quarter of 2012, compared to a loss of RMB0.6 million for the same period of 2011.

Nepstar's effective tax rate was 77.2 % for the third quarter of 2012, compared to 87.0% for the same period in 2011. As compared to the PRC statutory tax rate of 25% applicable to our major operating subsidiaries, the difference in the effective income tax rates was primarily due to non-deductible expenses and the relatively high amounts of operating losses from loss-making subsidiaries, for which full valuation allowances were made on their deferred tax assets, as compared to the overall results of the Company.

Net income in the third quarter of 2012 was RMB1.9 million (US$0.3 million), which represented RMB0.018 (US$0.002) basic and diluted earnings per American Depositary Share ("ADS"). This compares to a net income of RMB1.2 million, which represented RMB0.012 basic and diluted earnings per ADS for the same period of 2011.

The total number of outstanding ordinary shares of the Company as of September 30, 2012 was 197.4 million. The weighted average number of ordinary shares in the third quarter of 2012 was 197.6 million. Each ADS represents two ordinary shares of the Company.

As of September 30, 2012, Nepstar's total cash, cash equivalents and bank deposits were RMB570.4 million (US$90.8 million) and its shareholders' equity was RMB947.7 million (US$150.8 million).

In the third quarter of 2012, net cash flow from operations was RMB0.05 million (US$0.01 million) as compared to RMB34.1 million in the same period of 2011. The lower net cash-flow from operations, compared to the same period of last year, was partially caused by the increases in inventory of the non-pharmaceutical categories due to the optimization of the Company's product portfolio. It was also partially caused by stocking of certain best selling pharmaceutical products, for which the Company has relatively shorter credit terms than the other merchandise items, for the peak sales season of the coming quarter.

Business Outlook

"The fourth quarter is traditionally a strong quarter for drugstores due to the flu season and increased consumption of nutritional products towards the year-end. As our store network has already gone through a series of operational optimization since the beginning of this year, we expect our same store productivity to keep the momentum of robust sales in the fourth quarter. We will continue to broaden our product portfolio and strengthen our marketing programs to encourage customers to visit our stores more frequently and buy more products across categories each visit. At the same time, we will also focus on maintaining our high quality customer service and building customers' trust in our stores," stated Mr. Zhang.

Conference Call Information

The Company will host a conference call, to be simultaneously webcasted, on Wednesday, November 28, 2012 at 8:00 a.m. Eastern Time / 9:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-9210 (North America) or +1-201-689-8049 (International) approximately five minutes before the call start time. A live web cast of the conference call will be available on the Nepstar website at www.nepstar.cn.

A replay of the call will be available shortly after the conclusion of the conference call through December 5, 2012 at 11:59 p.m. Eastern Time or December 6, 2012 at 12:59 p.m. Beijing Time. An archived Web cast of the conference call will be available on the Nepstar website at http://www.nepstar.cn. Interested parties may access the replay by dialing +1-877-660-6853 (North America) or +1-201-612-7415 (International) and entering account number 286 and conference ID number 403401.

About China Nepstar Chain Drugstore Ltd.

China Nepstar Chain Drugstore Ltd. (NYSE: NPD) is China's largest retail drugstore chain based on the number of directly operated stores. As of September 30, 2012, the Company had 2,191 stores across 73 cities, one headquarter distribution center and 15 regional distribution centers in China. Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide its customers with high-quality, professional and convenient pharmacy services and a wide variety of other merchandise, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products including consumables. Nepstar's strategy of centralized procurement, competitive pricing, customer loyalty programs and private label offerings has enabled it to capitalize on the robust economic growth in China and to take advantage of the demographic trend in China to achieve a strong brand and leading market position. For further information, please go to http://www.nepstar.cn.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's strategic operational plans and business outlook, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Exchange Rate Information

The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the certified exchange rate of  US$1.00 = RMB6.2848 on September 30, 2012 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2012, or at any other date. The percentages stated are calculated based on RMB amounts.

Contacts

Lucia Qian
China Nepstar Chain Drugstore Ltd.
Vice President, IR
Phone: +86-755-2641-4065
Email: [email protected]

Dixon Chen
Grayling
Investor Relations
Tel: +1-646-284-9403
Email: [email protected]

Ivette Almeida
Grayling
Media Relations
Tel: +1-646-284-9455
Email: [email protected]

Tables follow

China Nepstar Chain Drugstore Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(amounts in thousands – except per-share data and per ADS data)




Three-month period ended

September 30,


2011

2012

2012


RMB

RMB

USD





Revenue

608,626

634,552

100,966

Cost of goods sold

(319,340)

(341,602)

(54,354)

Gross profit

289,286

292,950

46,612

Sales, marketing and other operating expenses

(259,540)

(254,162)

(40,441)

General and administrative expenses

(25,752)

(31,650)

(5,036)

Impairment losses of property and equipment

(1,012)

(2,956)

(470)

Income from operations

2,982

4,182

665

Interest income

6,101

3,638

579

Dividend income from cost method investments

682

-

-

Equity in income of an equity method investee

(630)

301

48

Income before income tax expense

9,135

8,121

1,292

Income tax expense

(7,948)

(6,270)

(998)

 

Net income

1,187

1,851

294





Basic earnings per ordinary share

0.006

0.009

0.001

Basic earnings per ADS

0.012

0.018

0.002

Diluted earnings per ordinary share

0.006

0.009

0.001

Diluted earnings per ADS

0.012

0.018

0.002

Net income

1,187

1,851

294

 

Other comprehensive income, net of tax:




 

Foreign currency translation adjustments

148

(457)

(73)





Comprehensive income

1,335

1,394

221





 

China Nepstar Chain Drugstore Ltd.

Unaudited Condensed Consolidated Balance Sheets

(amounts in thousands)






As of

As of

As of

December 31,

September 30,

September 30,


2011

2012

2012


RMB

RMB

USD

ASSETS




Current assets




Cash and cash equivalents

767,885

277,298

44,122

Short-term bank time deposits

43,000

273,100

43,454

Accounts receivable, net of allowance for doubtful accounts

102,937

107,186

17,055

Amounts due from related parties

4,649

7,017

1,117

Prepaid expenses, deposits and other current assets

122,831

141,097

22,450

Inventories

437,058

469,474

74,700

Deferred tax assets

2,009

3,195

508

Total current assets

1,480,369

1,278,367

203,406





Non-current assets




Long-term bank time deposits

169,000

20,000

3,182

Property and equipment, net

141,817

126,623

20,147

Rental deposits

39,559

38,928

6,194

Cost method investments

12,638

12,638

2,011

Equity method investment

36,703

36,752

5,848

Intangible assets, net

3,087

2,869

457

Goodwill

51,819

51,819

8,245

Deferred tax assets

3,151

2,598

413

Deposits for acquisition

1000

-

-

Accrued interest income

3,054

281

45

Total non-current asset

461,828

292,508

46,542

Total Assets

1,942,197

1,570,875

249,948





LIABILITIES AND SHAREHOLDERS'  EQUITY




Current liabilities




Accounts payable

352,386

381,645

60,725

Bills payable

-

6,195

986

Amounts due to related parties

18,169

16,765

2,667

Accrued expenses and other payables

118,121

116,310

18,507

Income tax payable

28,480

22,429

3,569

Deferred Income

10,662

16,141

2,568

Total current liabilities

527,818

559,485

89,022

 

Non-current liabilities




Deferred income

17,078

16,920

2,692

Deferred tax liabilities

12,032

12,574

2,001

Other non-current liabilities

31,015

34,214

5,444

Total non-current liabilities

60,125

63,708

10,137





Total liabilities

587,943

623,193

99,159





Shareholders' equity




Share capital

161

158

25

Treasury stock

(1,736)

-

-

Additional paid-in capital

1,252,232

833,519

132,624





Accumulated other comprehensive loss

(41,133)

(42,060)

(6,692)

Retained earnings

144,730

156,065

24,832





Total shareholders' equity

1,354,254

947,682

150,789





Total liabilities and shareholders' equity

1,942,197

1,570,875

249,948

SOURCE China Nepstar Chain Drugstore Ltd.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
SYS-CON Events announced today that mruby Forum will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. mruby is the lightweight implementation of the Ruby language. We introduce mruby and the mruby IoT framework that enhances development productivity. For more information, visit http://forum.mruby.org/.
Digital transformation is changing the face of business. The IDC predicts that enterprises will commit to a massive new scale of digital transformation, to stake out leadership positions in the "digital transformation economy." Accordingly, attendees at the upcoming Cloud Expo | @ThingsExpo at the Santa Clara Convention Center in Santa Clara, CA, Oct 31-Nov 2, will find fresh new content in a new track called Enterprise Cloud & Digital Transformation.
Most technology leaders, contemporary and from the hardware era, are reshaping their businesses to do software. They hope to capture value from emerging technologies such as IoT, SDN, and AI. Ultimately, irrespective of the vertical, it is about deriving value from independent software applications participating in an ecosystem as one comprehensive solution. In his session at @ThingsExpo, Kausik Sridhar, founder and CTO of Pulzze Systems, will discuss how given the magnitude of today's applicati...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
SYS-CON Events announced today that NetApp has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. NetApp is the data authority for hybrid cloud. NetApp provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with their partners, NetApp emp...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere delivers a more modern architectural approach to storage that doesn't require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbui...
SYS-CON Events announced today that Avere Systems, a leading provider of hybrid cloud enablement solutions, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere Systems was created by file systems experts determined to reinvent storage by changing the way enterprises thought about and bought storage resources. With decades of experience behind the company’s founders, Avere got its ...
Amazon is pursuing new markets and disrupting industries at an incredible pace. Almost every industry seems to be in its crosshairs. Companies and industries that once thought they were safe are now worried about being “Amazoned.”. The new watch word should be “Be afraid. Be very afraid.” In his session 21st Cloud Expo, Chris Kocher, a co-founder of Grey Heron, will address questions such as: What new areas is Amazon disrupting? How are they doing this? Where are they likely to go? What are th...
As hybrid cloud becomes the de-facto standard mode of operation for most enterprises, new challenges arise on how to efficiently and economically share data across environments. In his session at 21st Cloud Expo, Dr. Allon Cohen, VP of Product at Elastifile, will explore new techniques and best practices that help enterprise IT benefit from the advantages of hybrid cloud environments by enabling data availability for both legacy enterprise and cloud-native mission critical applications. By rev...
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, will discuss how they b...
SYS-CON Events announced today that SkyScale will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. SkyScale is a world-class provider of cloud-based, ultra-fast multi-GPU hardware platforms for lease to customers desiring the fastest performance available as a service anywhere in the world. SkyScale builds, configures, and manages dedicated systems strategically located in maximum-security...
High-velocity engineering teams are applying not only continuous delivery processes, but also lessons in experimentation from established leaders like Amazon, Netflix, and Facebook. These companies have made experimentation a foundation for their release processes, allowing them to try out major feature releases and redesigns within smaller groups before making them broadly available. In his session at 21st Cloud Expo, Brian Lucas, Senior Staff Engineer at Optimizely, will discuss how by using...
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...
SYS-CON Events announced today that Daiya Industry will exhibit at the Japanese Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ruby Development Inc. builds new services in short period of time and provides a continuous support of those services based on Ruby on Rails. For more information, please visit https://github.com/RubyDevInc.
As businesses evolve, they need technology that is simple to help them succeed today and flexible enough to help them build for tomorrow. Chrome is fit for the workplace of the future — providing a secure, consistent user experience across a range of devices that can be used anywhere. In her session at 21st Cloud Expo, Vidya Nagarajan, a Senior Product Manager at Google, will take a look at various options as to how ChromeOS can be leveraged to interact with people on the devices, and formats th...
SYS-CON Events announced today that Yuasa System will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Yuasa System is introducing a multi-purpose endurance testing system for flexible displays, OLED devices, flexible substrates, flat cables, and films in smartphones, wearables, automobiles, and healthcare.
Organizations do not need a Big Data strategy; they need a business strategy that incorporates Big Data. Most organizations lack a road map for using Big Data to optimize key business processes, deliver a differentiated customer experience, or uncover new business opportunities. They do not understand what’s possible with respect to integrating Big Data into the business model.
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities – ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups. As a result, many firms employ new business models that place enormous impor...