Economic downturn hurts Ever-Glory wholesale biz
Ever-Glory International Group, Inc. a leading apparel supply chain manager and retailer in China, today provided an update regarding the Company's 2009 year-end results.
The Company anticipates reporting full-year 2009 revenue from retail business that is better than the prior guidance of $13 million to $18 million. The retail business remains strong, and as of December 31, 2009, the company had 185 LA GO GO stores in operation in total.
The full-year 2009 revenue from wholesale was anticipated in a range of $73 to $78 million versus prior guidance of $90 to $100 million.
During the second and third quarters of 2009, wholesale business decreased 20% and 28% compared with the same periods of 2008. This decrease was primarily due to the worsening economic downturn. Ever-Glory suspended the orders of several customers due to the pessimistic financial outlook and concern over timely payment ability of those customers.
During the first quarter of 2009, wholesale business decreased 8% compared with the same period of 2008. This decrease was primarily attributable to the fact that most orders processed in this quarter were placed in the third quarter 2008 when the customers had not rapidly responded to the economic downturn yet.
During the fourth quarter of 2009, the Company saw the wholesale business decrease approximately 12% compared with the same period of 2008. The 12% rate of decrease was an improvement compared to 20% and 28% in the second and third quarters of 2009 reflective of the general economic condition in the US and Europe.
Due to the decline in revenues in the wholesale business, the Company anticipates full-year 2009 revenues in the range of $86 to $96 million versus prior guidance of $ 103 to $ 118 million. The Company expects net income, excluding non-cash charges, for 2009 to be in the range of $5.2 to $5.5 million versus previously reported guidance of $5.8 to $6.5 million. Annual EPS for 2009, excluding non-cash charges, is expected to be in the range of $0.35 and $0.40.
"Our wholesale business experienced decreased sales due to the economic downturn this year, as we previously anticipated," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "The majority of this decrease was due to our decision in 2009 to suspend orders with several customers as we had doubt of their ability to make timely payments. Our top priority in this difficult economy is to protect Ever-Glory, its financial position and its cash flow. We believe we are taking the appropriate steps to protect our finances and provide Ever-Glory with a more stable customer base. We would like to announce that our cash flow position is benefiting from these steps. In the meantime our gross margin was increased because we adjusted our product structure.
Mr. Kang commented, "We now have 185 LA GO GO retail stores throughout China that offer high quality items in a diverse array of trends and styles for every woman. We are pleased to have met our goal of opening up 180-200 retail stores in 2009 and will continue to focus our efforts on maximizing sales and profit margins for both our retail and wholesale apparel concepts."