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spk03: Good day and welcome to the Everglory International Group second quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Wilson Bao. Please go ahead, sir.
spk01: Thank you, operator. Hello, everyone, and welcome to Everglory International Group's second quarter 2021 earnings conference call. The company distributed its earnings press release earlier today via newswire services. You can also download it from Everglory's website at www.everglorygroupsinoneworld.com. With us today is Everglory's Chief Financial Officer, Mr. Jason Wan. The very important person, Mr. I-Hwa Kang, Everglory's Chairman, President, and Chief Executive Officer, is on a business trip today. and he is unable to join the call. So Mr. Wang will read the prepared remarks on behalf of this Mr. Kang. Before we get started, I will review the Safe Harbor Statement regarding today's conference call. Please note that the discussion today will contain forward-looking statements made under Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may differ materially from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's annual report on Form 10-Q for the second quarter ended June 30, 2021, and in other documents filed with the U.S. Securities and Exchange Commission. Everglory does not assume any obligation to update any forward-looking statement, except as required under applicable law. As a reminder, this conference call is being recorded. In addition, an audio webcast of this conference will be available on Everglory's investor relationship website. I will now turn the call over to Mr. Wang.
spk02: Thank you, Wilson. Good morning to those in the U.S. and good evening to those participants in Asia. Thank you for joining our second quarter 2021 earnings conference call. We are very pleased to announce the 2021 second quarter results with a 20.9% quarter-on-quarter increase in total sales. Notably, we achieved quarter-on-quarter improvement in gross profit of 46.7% for our retail business, but our wholesale business decreased 17.5% in gross profit compared with the three months ended June 30, 2020. The decrease was mainly due to raw material price, and higher outsourced production costs. On the retail side, our brands continue to attract new customers and return existing customers by focusing on design, quality, and value. Our inventory management strategy continually improves the balance between inventory turnover and our diligent cost control measures further strengthen the profitability of our business. We operate 52 stores and closed 57 stores in the first half year of 2021. As of June 30, 2021, we operated a nationwide network of 931 stores compared with 935 stores as of June 30, 2020. During 2021, we operated with a celebrity as a spokesperson of LaGogo. The effect of the celebrity will enhance our brand influence. While we still see a strong demand for our products at our retail stores, we continue to see opportunities in the e-commerce area. Variable platforms such as our local stores on Tmall and xingdong.com are used as a strategy and effective way for us to drive customer engagement. encourage cross-general shopping, reduce out-of-season inventory, and create a unique and differentiated customer experience to grow our loyal customer base. The complex wholesale business is still affected by COVID-19 and the pressure of the economic downturn. We will actively respond to the changes in the external economic environment. As for our wholesale business, the company has enhanced its intensive product development and supply chain management, emphasized as well as network of high quality, reliable and cost-efficient sourcing channels and manufacturers. In addition, our market research center provides our wholesale customers with in-depth research and analysis in the areas including brand positioning, fashion trends, new material development, and new style designs. Going forward, we will continue to focus on enhancing our product development capabilities and opportunities optimizing the customer base with our long-term vision of being a leading supply chain solution provider for middle-to-high and apparel brands both in mainland China and the worldwide. This concludes Ms. Kang's comments. I will now walk through our financial results for the second quarter of 2021. Please note that all numbers discussed today are in US dollars, unless otherwise noted. Second quarter 2021 financial results. Total sales for second quarter of 2021 were $60.6 million, an increase of 20.9% from $50.1 million in the second quarter of 2020. This increase was primarily driven by a 19.9% increase in our wholesale business and a 21.7% increase in retail business. Whereas for the complex-branded fashion apparel retail division increased by 21.7% to $34.1 million for the second quarter of 2021, compared with $28 million for the second quarter of 2020. This increase was formed due to the increase in same-store sales. The company operated 931 retail stores as of June 30, 2021, compared with 935 retail stores as of June 30, 2020. As for the company's wholesale division, increased by 19.9% to $26.4 million for the second quarter of 2021, compared with $22 million for the second quarter of 2020. This increase was primarily attributable to increased sales in mainland China, Hong Kong, the United Kingdom, and other European markets. partially operate for the decreased sales in Japan and the United States. Total gross profit for the second quarter of 2021 increased by 27.3% to $18.4 million, compared with $14.4 million for the second quarter of 2020. Total gross margin for the second quarter of 2021 increased to 30.4% from 28.8% for the second quarter of 2020. Growth provided for the retail business increased by 46.7% to 14.8 million for the second quarter of 2021, compared with 10.1 million for the second quarter of 2020. Growth margin for the second quarter of 2021 was 43.4% compared to 36.2% for the second quarter of 2020. Growth profile for the wholesale business decreased by 17.5% to 3.6 million for the second quarter of 2021, compared with 4.4 million for the second quarter of 2020. Gross margin for the second quarter of 2021 decreased to 13.6% from 19.7% for the second quarter of 2020. Sale expenses for the second quarter of 2021 increased by 14.9% to 14.5 million, or 24% of total sales, compared with 12.6 million, or 24%. 5.2% of total sales for the second quarter of 2020. The increase was attributable to the increased marketing expenses associated with the promotion of the retail brand. General and administrative expenses for the second quarter of 2021 increased by 28.3% to $7.3 million 12.7% of total sales compared with 6 million, or 11.9% of total sales for the second quarter of 2020. The increase was attributable to the decreased business chip and disruption of social benefits by the Republic of China government during the COVID-19 outbreak in China 2020. Loss from operations was $3.7 million for the second quarter of 2021, compared to $4.2 million for the second quarter of 2020. Net loss to the company for the second quarter of 2021 was $1.8 million, compared with $3.8 million for the second quarter of 2020. Basic and diluted loss per share was $0.12 for the second quarter of 2021, compared with $0.26 for the second quarter of 2020. As of June 30, 2021, Evergreen had approximately $64 million of the cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Evergory had a working capital of approximately $48.9 million as of June 30, 2021, and outstanding bank loans of approximately $65.5 million as of June 30, 2021. Our relentless efforts have been paying off with the 2021 second quarter results, and we look forward to further strengthening the fundamentals and increasing operations leverage to support the long-term profitability of our business. Thank you for participating in Evergreen's 2021 second quarter earnings call. We look forward to talking with you next quarter. If you have additional questions, please feel free to contact our IAR department. Goodbye. Thank you. Thank you, operator.
spk03: Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.
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