China Nepstar Chain Drugstore announced its unaudited financial results for the first quarter ended March 31, 2016.
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During the first quarter of 2016, the company opened 26 new stores and closed 24 stores. As of March 31, 2016, the company had a total of 2,000 directly operated stores.
Revenue increased by 9.9% to RMB834.3 million ($129.4 million) from RMB759.1 million for the same period in 2015. Same store sales (for the 1,807 stores opened before December 31, 2014 and which remained in operation as of March 31, 2016) for the first quarter of 2016 increased by 9.8% compared to the same period in 2015.
The increases in revenue and same store sales were mainly due to company's increased in-store promotional initiatives and improved marketing of pharmaceutical products.
First quarter revenue contribution by product category was 24.4% from prescription drugs (23.7% for the same period in 2015); 45.4% from over-the-counter ("OTC") drugs (41.2% for the same period in 2015); 10.5% from nutritional supplements (12.3% for the same period in 2015); 5.1% from herbal products (4.6% for the same period in 2015); and 14.6% from convenience and other products (18.2% for the same period in 2015).
First quarter gross profit increased to RMB350.4 million ($54.3 million) from RMB309.4 million in the same period of 2015. Gross profit margin in the first quarter of 2016 was 42.0%, compared with 40.8% in the same period of 2015, due to a better product mix.
The company's portfolio of private label products included 2,172 types of products as of March 31, 2016. Sales of private label products represented approximately 14.0% of total revenue and 20.6% of total gross profit for the first quarter of 2016.
Sales, marketing and other operating expenses as a percentage of revenue decreased slightly to 36.3% for the first quarter of 2016 from 36.5% for the same period of 2015.
General and administrative expenses as a percentage of revenue were 3.9% for the first quarter of 2016 compared to 4.3% for the same period of 2015. This decrease primarily resulted from the increasing revenue achieved and management's stringent cost control.
Income from operations in the first quarter of 2016 was RMB14.4 million ($2.2 million) which compared with loss from operations of RMB0.2 million in the same period of 2015.
Interest income for the first quarter of 2016 was RMB1.6 million ($0.3 million), similar to the RMB1.7 million recorded for the same period of 2015.
The company's income tax expense was computed at RMB8.5 million ($1.3 million) for the first quarter of 2016, compared with income tax expense of RMB6.8 million for the same period in 2015. The effective tax rate for the first quarter of 2016 was 53.2%.
Net income for the first quarter of 2016 was RMB7.5 million ($1.2 million), or RMB0.08 ($0.01) basic and diluted earnings per ADS, which compares to a net loss of RMB3.4 million, or RMB0.03 basic and diluted losses per ADS recorded for the first quarter of 2015. As of March 31, 2016, the company had 197.4 million outstanding ordinary shares. Each ADS represents two ordinary shares of the company.
In the first quarter of 2016, net cash inflow provided by operating activities was RMB63.6 million ($9.9 million), compared to net cash inflow of RMB51.9 million for the same period in 2015.
As of March 31, 2016, the company's total cash, cash equivalents, bank deposits and restricted cash were RMB385.9 million ($59.9 million) and its shareholders' equity was RMB878.9 million ($136.3 million), compared to RMB365.7 million and RMB871.4 million, respectively, as of December 31, 2015. ■