Mr. Qingqing Wu, Chairman and CEO of VLOV, stated, "Although first quarter sales were impacted by soft performance in some of our southern regions, we anticipate improved overall sales trends during the balance of the year. We are focused on three key initiatives to drive sales: 1) We are working closely with all of our distributors to strengthen their existing VLOV points of sale, including potentially refurbishing select locations and increasing local marketing efforts. 2) As part of our strategy to evolve VLOV's lifestyle brand positioning and extend our reach to higher income consumers, we have enhanced our design aesthetic to be more stylish and chic. Similarly, the newest generation of VLOV POS reflects a contemporary, stylish and sophisticated image. At the same time, we have raised our price points, which we expect will drive continued increases in gross margin performance this year. 3) We are implementing targeted advertising and marketing programs, including advertising the VLOV brand in key fashion publications such as GQ and Men's Vogue, hosting VLOV fashion shows and sponsoring events that resonate with our target demographic. In particular, we are focused on northeastern China, including Beijing, Shandong and Liaoning, which have a number of Tier II and Tier III cities that represent strong potential markets for the VLOV brand.
"Looking at the balance of 2010, we believe the Company is well-positioned to achieve sales growth and continued gross margin expansion while building long-term brand value through increased marketing and advertising efforts. VLOV's target customers have high discretionary income levels, they are discerning about the brands they buy and seek the stylish, chic, fashion-forward look that VLOV offers."
Mr. Qingqing Wu concluded, "We are enthusiastic about our upcoming sales preview being held in Xiamen at the end of May. We believe our designs will meet with excellent response from both our distributors and the fashion press and look forward to providing our investors with feedback from this important event."
Key Operating Metrics POS - VLOV products were sold through 742 points of sale as of March 31, 2010, an increase of 8% compared to 689 locations a year ago. The Company has agreements with 12 distributors in 12 regions throughout northern, central and southern China. This compares to 14 distributors and 10 regions as of March 31, 2009.
Average Selling Price - VLOV's average selling price at retail as of March 31, 2010 was $47, an increase of 15% compared to $41 a year ago.
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