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China Nepstar Chain Drugstore revenue up 7.4%

Staff writer |
China Nepstar Chain Drugstore announced its unaudited financial results for the third quarter ended September 30, 2015. The company opened 47 new stores while it closed 30 stores.

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As of September 30, 2015, the company had 1,965 directly operated stores in total.

Revenue for the third quarter of 2015 increased by 7.4% to RMB793 million ($124.8 million) from RMB738.3 million for the same period in 2014.

Same store sales (for the 1,740 stores opened before December 31, 2013 and which were still operating as of September 30, 2015) for the third quarter of 2015 increased by 13.2% compared to the same period in 2014. The increase in same store sales was primarily due to in-store marketing initiatives and improved product mix.

Third quarter revenue contribution by product category was 23.4% from prescription drugs (22.7% for the same period in 2014), 43.1% from over-the-counter (OTC) drugs (38.7% for the same period in 2014), 17.6% from convenience and other products (21.0% for the same period in 2014), 11.5% from nutritional supplements (13.6% for the same period in 2014), and 4.4% from herbal products (4.0% for the same period in 2014).

Third quarter gross profit was RMB324.0 million ($51.0 million) compared to RMB298.3 million in the same period of 2014. Gross margin in the third quarter of 2015 was 40.9%, compared with 40.4% in the same period of 2014. The year-over-year increase in gross margin was mainly the result of improved product mix and increased store productivity.

The company's portfolio of private label products expanded to 2,165 types of products as of September 30, 2015. Sales of private label products represented approximately 13.6% of the company's revenue and 20.5% of the gross profit for the third quarter of 2015.

Sales, marketing and other operating expenses as a percentage of revenue decreased slightly to 37.0% for the third quarter of 2015 from 37.9% in the same period of 2014.

General and administrative expenses as a percentage of revenue were 3.3% for the third quarter of 2015 compared to 4.1% for the same period of 2014. This was mainly due to the company's efforts to improve efficiencies and the write-off of certain accounts payables when the de-recognition threshold was met.

Income from operations in the third quarter of 2015 was RMB4.5 million ($0.7 million) compared with loss from operations of RMB13.1 million in the same period of 2014. This increase was mainly due to the continuous revenue growth and improved margin.

Interest and investment income for the third quarter of 2015 was RMB1.1 million ($0.2 million), compared with RMB1.5 million in the same period of 2014.


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