China Nepstar Chain Drugstore announced its unaudited financial results for the first quarter ended March 31, 2015. During the first quarter of 2015, the company opened 26 new stores and closed 37 stores.
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As of March 31, 2015, the company had a total of 1,969 directly operated stores.
Revenue for the first quarter of 2015 increased by 11.9% to RMB759.1 million ($122.5million) from RMB678.3 million for the same period in 2014. Same store sales (for the 1,819 stores opened before December 31, 2013 and which remained in operation as of March 31, 2015) for the first quarter of 2015 increased by 13.6% compared to the same period in 2014.
The increases in revenue and same store sales were mainly due to our increased in-store promotional initiatives and marketing of pharmaceutical products.
First quarter revenue contribution by product category was 23.7% from prescription drugs (23.3% for the same period in 2014); 41.2% from over-the-counter ("OTC") drugs (40.3% for the same period in 2014); 12.3% from nutritional supplements (14.8% for the same period in 2014); 4.6% from herbal products (4.5% for the same period in 2014); and 18.2% from convenience and other products (17.1% for the same period in 2014).
First quarter gross profit increased to RMB309.4 million ($49.9 million) from RMB278.4 million in the same period of 2014. Gross profit margin in the first quarter of 2015 was 40.8%, compared with 41.0% in the same period of 2014.
The company's portfolio of private label products expanded to 2,146 types of products as of March 31, 2015. Sales of private label products represented approximately 15.4% of total revenue and 22.7% of total gross profit for the first quarter of 2015.
Sales, marketing and other operating expenses slightly increased for the first quarter of 2015 compared to the same period of 2014, but its percentage as of revenue decreased to 36.5% from 39.9%.
General and administrative expenses as a percentage of revenue were 4.3% for the first quarter of 2015 compared to 5.4% for the same period of 2014. This decrease primarily resulted from management's efforts to streamline costs.
Loss from operations in the first quarter of 2015 was RMB0.2 million ($30.5 thousand) compared with loss from operations of RMB28.8 million in the same period of 2014.The significant reduction in loss was mainly due to increased sales and our cost control measures in the first quarter of 2015.
Interest income for the first quarter of 2015 was RMB1.7 million ($0.3 million), compared with RMB2.5 million for the same period of 2014.
The company's income tax expense was RMB6.8 million ($1.1 million) for the first quarter of 2015, compared with tax credit of RMB3.1 million for the same period in 2014.The effective tax rate for the first quarter of 2015 was 198.6%.
The difference in the effective income tax rate and the PRC statutory tax rate of 25% applicable to our major operating subsidiaries was primarily due to non-deductible expenses and the operating losses from certain loss-making subsidiaries, for which full valuation allowances were made on their deferred tax assets, when compared to the overall results of operation of the company.
Shareholders are reminded that in the PRC, losses in companies which are part of a group are not allowed to be off-set against profits arising from other companies in the same group.
Net loss for the first quarter of 2015 was RMB3.4 million ($0.5 million), or RMB0.03 ($0.006) basic and diluted losses per ADS, compared to net loss of RMB18.2 million, or RMB0.18 basic and diluted losses per ADS for the first quarter of 2014. As of March 31, 2015, the company had 197.4 million outstanding ordinary shares. Each ADS represents two ordinary shares of the company.
In the first quarter of 2015, net cash flow provided by operating activities was RMB51.9 million ($8.4 million), compared to net cash outflow of RMB22.6 million for the same period in 2014. This reversal of cash outflow was primarily due to improved operating performance during the first quarter of 2015, compared to the same period in 2014.
As of March 31, 2015, the company's total cash, cash equivalents, bank deposits and restricted cash were RMB327.9 million ($52.9 million) and its shareholders' equity was RMB828.2 million ($133.6 million), compared to RMB316.9 million and RMB831.6 million, respectively, as of December 31, 2014. ■