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Zuoan Fashion Q4 gross profit trips 36.4%

May 01, 2014 (China)

Zuoan Fashion Limited, a leading design-driven fashion casual menswear company in China, announced its financial results for the fourth quarter and full year ended December 31, 2013.
 
Fourth Quarter 2013 Financial Highlights 
-Revenues in the fourth quarter of 2013 were RMB257.8 million ($42.6 million), a decrease of 30.2% from RMB369.6 million in the same quarter of 2012. 
-Gross profit in the fourth quarter decreased 36.4% year over year to RMB106.9 million ($17.7 million) from RMB167.9 million in the same quarter of 2012. 
-Gross margin was 41.4% compared with 45.4% in the prior year period and 40.9% in the third quarter of 2013. 
-Net income was RMB11.0 million ($1.8 million), a decrease of 84.0% from RMB69.0 million in the same quarter of 2012. 
-Diluted earnings per ordinary share was RMB0.10 ($0.02) in the fourth quarter, equivalent to RMB0.40 ($0.07) per ADS, compared to diluted earnings per ordinary share of RMB0.62 ($0.10) or RMB2.48 ($0.41) per ADS in the fourth quarter of 2012.
 
Fourth Quarter 2013 Financial Performance
Revenue for the fourth quarter of 2013 was RMB257.8 million ($42.6 million), representing a decrease of 30.2% from RMB369.6 million in the same quarter of 2012. 
 
The decrease was primarily attributed to decreased sales volume resulted from a cancellation of sales orders for the Company's Fall/Winter collection 2013 back in June, due to the economic downturn in the menswear sector during the second half of 2013 as well as a decrease in the wholesale price to our distributors from 38% to 35% of the retail prices since the third quarter of 2013. 
 
During the quarter, distributor sales decreased by 30.8% to RMB252.3 million from RMB364.8 million in the same quarter of 2012. Fourth quarter 2013 self-operated direct store sales increased to RMB5.5 million from RMB4.7 million in the same quarter of 2012. 
 
A total of 9 distributor and sub-distributor stores were opened and one direct store was closed in the fourth quarter of 2013, resulting in a total of 1,082 store locations as of December 31, 2013 compared to 1,074 store locations at the end of the third quarter. 
 
Cost of sales decreased by 25.1% to RMB151.0 million ($24.9 million) in the fourth quarter of 2013 from RMB201.6 million in the same quarter of 2012, in-line with the revenue decrease associated with cancelled sales orders.  As a percentage of revenues, cost of sales increased to 58.6% in the fourth quarter of 2013 from 54.6% in the same quarter of 2012.
 
Gross profit decreased by 36.4% to RMB106.9 million ($17.7 million) from RMB167.9 million in the fourth quarter of 2012.  Fourth quarter 2013 gross margin was 41.4% compared with 45.4% in the same quarter of 2012. The decrease in gross margin was primarily due to the decrease in the Company's wholesale price discount that was implemented since the third quarter of 2013.
 
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Zuoan Fashion Limited
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