FUQI International retains earnings of $16.8 mn

31 Mar '08

3 min read

FUQI International Inc announced financial results for the fourth quarter and fiscal year ended December 31, 2007.

Revenues for the fourth quarter of 2007 increased 122% to $55.1 million from $24.8 million in the fourth quarter of 2006, due to increases in sales volumes and selling prices.

Gross profit in the fourth quarter increased 98% to $5.8 million compared to $2.9 million in the prior year. This increase in gross profit was primarily attributable to higher selling prices for new jewelry designs as well as a generally more favorable pricing environment in the precious metal market, which resulted in increased processing fees on jewelry items delivered during the fourth quarter.

Gross profit margin for the fourth quarter decreased 120 basis points to 10.6% compared to 11.8% in the prior year. The decline in gross margin occurred for two reasons.

First, during the quarter, the Company initiated (and has since ended) a limited-time, promotional discount on design fees that increased brand awareness, attracted new buyers, and generated larger orders.

Additionally, gross margin was impacted by some very short-term fluctuations in gold prices during late November and early December. As a result of increased demand, the Company replenished its lower-cost inventory in November in preparation for a large sales event hosted by the Company in December.

Raw materials prices in both November and December were higher than the inventory that had already been used in the quarter, and as a result of the short-term fluctuation, gross margin was also impacted.

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