Click here to close now.

Welcome!

.NET Authors: Greg O'Connor, Michael Kanasoot, Jayaram Krishnaswamy, Adine Deford, Peter Silva

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
SYS-CON Events announced today that Litmus Automation will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Litmus Automation’s vision is to provide a solution for companies that are in a rush to embrace the disruptive Internet of Things technology and leverage it for real business challenges. Litmus Automation simplifies the complexity of connected devices applications with Loop, a secure and scalable cloud platform.
The world's leading Cloud event, Cloud Expo has launched Microservices Journal on the SYS-CON.com portal, featuring over 19,000 original articles, news stories, features, and blog entries. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. Microservices Journal offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Follow new article posts on Twitter at @MicroservicesE
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, will discuss how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at the same time reduce Time to Market (TTM) by using plug and play capabilities offered by a robust I...
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Raspberry Pi, BeagleBone, Spark and Intel Edison. You will also get an overview of cloud technologies s...
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch of Docker's initial release in March of 2013, interest was revved up several notches. Then late last...
The WebRTC Summit 2014 New York, to be held June 9-11, 2015, at the Javits Center in New York, NY, announces that its Call for Papers is open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 16th International Cloud Expo, @ThingsExpo, Big Data Expo, and DevOps Summit.
SOA Software has changed its name to Akana. With roots in Web Services and SOA Governance, Akana has established itself as a leader in API Management and is expanding into cloud integration as an alternative to the traditional heavyweight enterprise service bus (ESB). The company recently announced that it achieved more than 90% year-over-year growth. As Akana, the company now addresses the evolution and diversification of SOA, unifying security, management, and DevOps across SOA, APIs, microservices, and more.
Wearable technology was dominant at this year’s International Consumer Electronics Show (CES) , and MWC was no exception to this trend. New versions of favorites, such as the Samsung Gear (three new products were released: the Gear 2, the Gear 2 Neo and the Gear Fit), shared the limelight with new wearables like Pebble Time Steel (the new premium version of the company’s previously released smartwatch) and the LG Watch Urbane. The most dramatic difference at MWC was an emphasis on presenting wearables as fashion accessories and moving away from the original clunky technology associated with t...
SYS-CON Events announced today that robomq.io will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. robomq.io is an interoperable and composable platform that connects any device to any application. It helps systems integrators and the solution providers build new and innovative products and service for industries requiring monitoring or intelligence from devices and sensors.
The list of ‘new paradigm’ technologies that now surrounds us appears to be at an all time high. From cloud computing and Big Data analytics to Bring Your Own Device (BYOD) and the Internet of Things (IoT), today we have to deal with what the industry likes to call ‘paradigm shifts’ at every level of IT. This is disruption; of course, we understand that – change is almost always disruptive.
SYS-CON Events announced today that Solgenia will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Solgenia is the global market leader in Cloud Collaboration and Cloud Infrastructure software solutions. Designed to “Bridge the Gap” between Personal and Professional Social, Mobile and Cloud user experiences, our solutions help large and medium-sized organizations dr...
SYS-CON Events announced today that SafeLogic has been named “Bag Sponsor” of SYS-CON's 16th International Cloud Expo® New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. SafeLogic provides security products for applications in mobile and server/appliance environments. SafeLogic’s flagship product CryptoComply is a FIPS 140-2 validated cryptographic engine designed to secure data on servers, workstations, appliances, mobile devices, and in the Cloud.
After making a doctor’s appointment via your mobile device, you receive a calendar invite. The day of your appointment, you get a reminder with the doctor’s location and contact information. As you enter the doctor’s exam room, the medical team is equipped with the latest tablet containing your medical history – he or she makes real time updates to your medical file. At the end of your visit, you receive an electronic prescription to your preferred pharmacy and can schedule your next appointment.
GENBAND has announced that SageNet is leveraging the Nuvia platform to deliver Unified Communications as a Service (UCaaS) to its large base of retail and enterprise customers. Nuvia’s cloud-based solution provides SageNet’s customers with a full suite of business communications and collaboration tools. Two large national SageNet retail customers have recently signed up to deploy the Nuvia platform and the company will continue to sell the service to new and existing customers. Nuvia’s capabilities include HD voice, video, multimedia messaging, mobility, conferencing, Web collaboration, deskt...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
SYS-CON Events announced today that Cisco, the worldwide leader in IT that transforms how people connect, communicate and collaborate, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cisco makes amazing things happen by connecting the unconnected. Cisco has shaped the future of the Internet by becoming the worldwide leader in transforming how people connect, communicate and collaborate. Cisco and our partners are building the platform for the Internet of Everything by connecting the...
Temasys has announced senior management additions to its team. Joining are David Holloway as Vice President of Commercial and Nadine Yap as Vice President of Product. Over the past 12 months Temasys has doubled in size as it adds new customers and expands the development of its Skylink platform. Skylink leads the charge to move WebRTC, traditionally seen as a desktop, browser based technology, to become a ubiquitous web communications technology on web and mobile, as well as Internet of Things compatible devices.
Docker is an excellent platform for organizations interested in running microservices. It offers portability and consistency between development and production environments, quick provisioning times, and a simple way to isolate services. In his session at DevOps Summit at 16th Cloud Expo, Shannon Williams, co-founder of Rancher Labs, will walk through these and other benefits of using Docker to run microservices, and provide an overview of RancherOS, a minimalist distribution of Linux designed expressly to run Docker. He will also discuss Rancher, an orchestration and service discovery platf...
SYS-CON Events announced today that Vitria Technology, Inc. will exhibit at SYS-CON’s @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Vitria will showcase the company’s new IoT Analytics Platform through live demonstrations at booth #330. Vitria’s IoT Analytics Platform, fully integrated and powered by an operational intelligence engine, enables customers to rapidly build and operationalize advanced analytics to deliver timely business outcomes for use cases across the industrial, enterprise, and consumer segments.
SYS-CON Events announced today that Liaison Technologies, a leading provider of data management and integration cloud services and solutions, has been named "Silver Sponsor" of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York, NY. Liaison Technologies is a recognized market leader in providing cloud-enabled data integration and data management solutions to break down complex information barriers, enabling enterprises to make smarter decisions, faster.