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Share Name | Share Symbol | Market | Type |
---|---|---|---|
LJ International, Inc. (MM) | NASDAQ:JADE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 2.00 | 0 | 01:00:00 |
Revenues for the first quarter of 2010 totaled $26.9 million, up 18% from $22.7 million in the first quarter of 2009. This year-over-year revenue increase is largely due to stabilization in the global economy and strong pent-up demand by Chinese middle-class clientele.
The increase was driven by a year-over-year rise of 38% at LJI's ENZO chain of retail stores in China, Hong Kong and Macau. ENZO revenue in the first quarter of 2010 was $16.4 million, up from $11.9 million in the first quarter of 2009.
Revenues from LJI's wholesale operations totaled $10.4 million in the first quarter of 2010, down 3% from $10.8 million a year earlier. Based on previous quarters, this figure points towards future growth in the wholesale division.
Companywide revenues and retail revenues exceeded earlier guidance of approximately $26 million and $15.5 million, respectively. Wholesale revenue guidance was $10.5 million.
Retail Growth Boosts Margins and Net Income
Gross profit in the first quarter of 2010 was $11.1 million, up 27% from $8.7 million a year earlier. Gross margin (gross profit as a percentage of revenues) was 41%, up from 39% in the first quarter of 2009. The increase margin reflects the increasing share of higher-margin revenues generated by the ENZO division. During the first quarter of 2010, ENZO gross margin was 53% compared to 22% for the wholesale division.
Selling, general and administrative (SG&A) expenses for the latest quarter totaled $8.5 million, compared to $7.9 million in the first quarter of 2009. After SG&A expenses, depreciation and net gain on derivatives, operating income in the first quarter of 2010 was $2.0 million, up from $0.4 million a year earlier.
Income before taxes and non-controlling interest was $2.1 million, or $1.8 million excluding gain on the sale of securities. This compares to $0.1 million a year earlier.
Net income attributable to common shareholders was $1.9 million in the first quarter of 2010, up from $0.1 million a year earlier. Earnings per fully diluted share rose year-over-year to $0.07 from $0.01.
Comparable Sales Register Double-Digit Gain
Comparable ENZO sales -- at the 75 stores open 12 months or more at the start of the first quarter of 2010 -- were up 14% year-over-year. A total of 95 ENZO stores were in operation by the end of the first quarter. The average revenues per store in the comparable-store group rose to an annual rate of $636,000.
Results Mark Recovery and Start of New Growth Phase -- CEO
Yu Chuan Yih, LJI's Chairman and CEO, commented, "Today's report confirms that LJI is on the growth track within the global jewelry market and especially within the Chinese market. Two trends are especially notable and encouraging. First, the continued double-digit growth in comparable-store sales shows that the branding strategy for ENZO and its product lines is a success. Without the significant addition of new stores, ENZO has been able to sustain robust growth through increasing consumer demand in its existing store network. We believe that ENZO products are an ideal fit for the tastes of China's newly affluent women, and ENZO's financial results suggest we are right. The comp-store numbers also reflect our success in developing an effective operational model for ENZO stores (nearly all of which are now profitable). As we begin an aggressive expansion in the coming months, we are confident that this model will be equally successful as it is deployed in new locations."
Mr. Yih continued, "The other encouraging trend is the recovery in our wholesale business. We continue to work with our global customers and support their growing operations as the worldwide economy shifts into growth mode. In the current quarter, we expect wholesale revenues to show a healthy increase above year-earlier levels. Though retail is now the primary growth driver at LJI, our wholesale operations will continue to play an important role in our vertically integrated business model and as one source of cash flows to finance future expansion. Now, with our wholesale revenues stabilized and a substantial number of new ENZO stores due to be opened this year, the Company is entering a new and exciting growth phase."
Cash Level Reflects Inventory Build-Up
On the balance sheet, cash and cash equivalents totaled $5.3 million on March 31, 2010, compared to $11.3 million on December 31, 2009. The decrease was largely due to a build-up of inventory during the first quarter in preparation for the opening of new ENZO stores in the second quarter and beyond. Inventories rose to $87.1 million on March 31, 2010 from $81.4 million at the end of 2009.
Working Capital Rises, Long-Term Debt Reduced
LJI's working capital rose during the quarter to $79.2 million, or approximately 115% of market cap, on March 31, 2010 from $77.6 million on December 31, 2009. The Company's long-term debt decreased during the first quarter of 2010 to $1.8 million from $2.3 million.
Revenue Seen Rising 30% in Q2 to $29 Million
In guidance for the second quarter ending June 30, 2010, LJI projects total revenues of approximately $29 million. The projected overall revenue would be approximately 30% above the $22.4 million reported in the second quarter of 2009. By segment, the projected year-over-year revenue increase would be approximately 40% for retail and 21% for wholesale. Net income is expected to reach between $1.9 million to $2.0 million, or approximately $0.08 per fully diluted share, in the second quarter of 2010, up from $0.1 million or $0.01 per fully diluted share a year earlier.
About LJ International Inc.
LJ International Inc. (LJI) (NASDAQ: JADE) is engaged in the designing, branding, marketing and distribution of its full range of jewelry. It has built its global business on a vertical integration strategy, and an unwavering commitment to quality and service. Through its China-based ENZO retail chain stores, LJI is now a major presence in China's fast-growing retail jewelry market. As a wholesaler, it distributes to fine jewelers, department stores, national jewelry chains and electronic and specialty retailers throughout North America and Western Europe. Its product lines incorporate all major categories, including earrings, necklaces, pendants, rings and bracelets. For more information on the Company, visit the Company's website at www.ljintl.com.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "believes," "estimates," "projects," "expects" and similar references to future periods. Examples of forward- looking statements include, but are not limited to, statements we make regarding our guidance relating to our operating results for the second quarter ending June 30, 2010, including total revenues and earnings per fully diluted share. The foregoing is not an exclusive list of all forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the global economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include global political, economic, business, competitive, market and regulatory conditions and the following: the current global financial crisis and economic conditions; changes in consumer spending patterns and consumer preferences; the effects of political and economic events and conditions in the U.S., China and worldwide; the impact of competition and pricing; market price of key raw materials; political instability; currency and exchange risks and changes in existing or potential duties, tariffs or quotas; availability of attractive store locations; our ability to develop new merchandise; and our ability to hire, train and retain associates. The risk factors that are presented in Item 3.D. of our Report on Form 20-F for the fiscal year ended December 31, 2009, as well as the disclosures contained in our other public filings which we have filed with the Securities and Exchange Commission.
Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
LJ INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Three months ended March 31, ---------------------- 2010 2009 ---------- ---------- US$ US$ Operating revenue 26,853 22,689 Costs of goods sold (15,744) (13,964) ---------- ---------- Gross profit 11,109 8,725 Operating expenses Selling, general and administrative expenses (8,540) (7,867) Net gain on derivatives 35 197 Depreciation (594) (705) ---------- ---------- Operating income 2,010 350 Other revenue and expense Interest income 6 18 Gain on sale of securities 258 - Interest expenses (207) (239) ---------- ---------- Income before income taxes and noncontrolling interest 2,067 129 Income taxes expense (206) - ---------- ---------- Net income 1,861 129 Net (income) loss attributable to noncontrolling interest (1) 1 ---------- ---------- Net income attributable to LJ International Inc. common shareholders 1,860 130 ========== ========== Earnings per share: Basic 0.08 0.01 Diluted 0.07 0.01 Weighted average number of shares used in calculating diluted earnings per share 25,290,523 23,268,678 ========== ========== LJ INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) As of As of March 31, December 31, 2010 2009 ----------- ------------ (Unaudited) US$ US$ ASSETS Current assets Cash and cash equivalents 5,298 11,282 Restricted cash 9,341 6,425 Trade receivables, net of allowance for doubtful accounts 20,545 21,679 Derivatives 41 - Available-for-sale securities 2,290 2,360 Inventories 87,105 81,401 Prepayments and other current assets 4,853 1,861 ----------- ------------ Total current assets 129,473 125,008 Properties held for lease, net 708 717 Property, plant and equipment, net 6,357 6,400 Deferred tax assets 111 111 Goodwill, net 1,521 1,521 ----------- ------------ Total assets 138,170 133,757 =========== ============ Liabilities and shareholders' equity Current liabilities Bank overdrafts 2,933 2,908 Notes payable 8,337 5,551 Capitalized lease obligation, current portion 100 98 Letters of credit, gold loan and others 17,192 13,481 Trade payables 14,383 18,545 Accrued expenses and other payables 5,672 5,354 Income taxes payable 1,312 1,147 Deferred taxation 310 310 ----------- ------------ Total current liabilities 50,239 47,394 Notes payable, non-current portion 1,787 2,244 Capitalized lease obligation, non-current portion 52 78 ----------- ------------ Total liabilities 52,078 49,716 ----------- ------------ Equity Common stocks, par value US$0.01 each, Authorized 100 million shares; Issued 24,680,172 shares as of March 31, 2010 and 23,768,672 shares as of December 31, 2009 247 238 Additional paid-in capital 57,184 56,675 Accumulated other comprehensive (loss) gain (227) 102 Retained earnings 28,717 26,857 ----------- ------------ Total LJ International Inc. shareholders' equity 85,921 83,872 Noncontrolling interest 171 169 ----------- ------------ Total equity 86,092 84,041 ----------- ------------ Total liabilities and equity 138,170 133,757 =========== ============
Contacts Corporate: Mr. Ringo Ng Chief Financial Officer LJ International Inc. Tel: 011-852-2170-0018 Email Contact www.ljintl.com Investor Relations: Ms. Jennifer K. Zimmons / Richard Cooper Managing Director/Chairman Strategic Growth International, Inc. Tel: 212-838-1444 Email Contact / Email Contact www.sgi-ir.com
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