Ever-Glory International Group, Inc.

Q3 2021 Earnings Conference Call

11/12/2021

spk03: Good day and welcome to the Everglory International Group third quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Wilson Bell. Please go ahead.
spk02: Thank you, operator. Hello, everyone, and welcome to Everglory International Group's third 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.everglorygroup.com. With us today is Everglory's Chief Financial Officer, Mr. Jason Wan. And Mr. Yihua Kang Everglory's Chairman, President, and Chief Executive Officer is on a business trip today, and he is unable to join the call today. Mr. Wang will read the prepared remarks on behalf of Mr. Kang. Before we get started, I, Wilson Bao, will review the Safe Harbor Statement regarding today's conference call. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security 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 third quarter that ended September 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 Relations website. Now I will turn the call over to Mr. Wang.
spk01: Thank you, Wilson. Good morning to those in U.S. and good evening to those participants in Asia. Thank you for joining our third quarter 2021 earnings conference call. We are very pleased to announce the 2021 third quarter results with a 19.1% quarter-on-quarter increase in total sales, not by We achieved quarter-on-quarter improvement in gross profit of 11.2% for our wholesale business, but our retail business decreased 10.3% in gross profit compared with three months ended September 30, 2020. The decrease was mainly due to increased production costs and write-off obsolete On the retail side, our brands continue to attract new customers and retain 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 opened 83 stores and closed 126 stores in nine months of 2021. As of September 30, 2021, we operated a nationwide network of 893 stores, compared with 923 stores as of September 30, 2020. During 2021, we operated with the celebrity as a spokesperson of LaGogo. The effect of the celebrity will enhance our brand in France. While we still see strong demand for our products at our retail stores, we continue to see opportunities in the e-commerce area. viable platforms such as Avala Google stores on Tmall and Jingdong.com are used as strategic and effective way for us to drive customer engagement, encourage cross-channel shopping, reduce out-of-season inventory, and create a unique and differentiated customer experience grow our loyal customer base. The company's wholesale business is still affected by COVID-19 and the price of the economic downturn. We will actively respond to the changes in the internal economic environment. As for our wholesale business, the company has enhanced its extensive product development and supply chain management expertise 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 design. Going forward, we will continue to focus on enhancing our product development capabilities and optimizing the customer base. With our long-term vision of being a leading supply chain solution provider for mid- to high-end apparel from both mainland China and worldwide. This concludes Ms. Kang's comments. I will now walk through our financial results for the third quarter of 2021. Please note that all numbers discussed today are in U.S. dollars unless otherwise noted. Total sales for the third quarter of 2021 were $94.4 million, an increase of 18.1% from 79.9 million in the third quarter of 2020. This increase was primarily driven by a 38% increase in our wholesale business, partially offset by a 7.6% decrease in retail business. Sales for the complex branded fashion apparel retail division decreased by 7.6% to 32.2 million for third quarter of 2021, compared with 34.8 million for third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales. The company operated 893 retail stores as of September 30, 2021. compared with 923 retail stores as of September 30, 2020. Therefore, the company's wholesale division increased by 38% to 62.2 million for the third quarter of 2021, compared with 45.1 million for the third quarter of 2020. This increase was primarily attributable increase in sales in mainland China, Europe and other, Japan, and the United States, partially offset by a decrease in sales in Hong Kong and the United Kingdom. Total growth per factor for the third quarter of 2021 decreased by 2% to $23.2 million, compared with $23.7 million for the third quarter of 2020. Total growth margin for third quarter of 2021 decreased to 24.6% from 29.6% for third quarter of 2020. Growth effect for the retail business decreased by 10.3% to 13 million for the third quarter of 2021, compared with 14.5 million for the third quarter of 2020. Gross margin for third quarter of 2021 was 40.3% compared to 41.6% for third quarter of 2020. Gross profit for the wholesale business increased by 11.2% to 10.2 million for third quarter of 2021 compared with 9.2 million for third quarter of 2020. Gross margin for the third quarter of 2020 decreased to 15.4% from 20.4% for the third quarter of 2020. Selling expenses for the third quarter of 2021 increased by 11.1% to 14.4 million, or 15.3% of total sales, compared with 13 million, or 15.3% of total sales for the third quarter of 2020. The increase was attributed to the higher traveling expenses, general and administrative expenses for the third quarter of 2021, increased by 21.1% to 9.5 million or 10% of total sales, compared with 7.8 million or 9.8% of total sales for the third quarter of 2020. The increase was attributable to the increased salaries. Last income from operations was 0.7 million for the third quarter of 2021, compared to 2.9 million for the third quarter of 2020. That loss attributed to the company for the third quarter of 2021 was 3.2 million, compared with 2.2 million for the third quarter of 2020. Basic adulthood loss per share was 22 cents for the third quarter of 2021, compared with 15 cents for the third quarter of 2020. As of September 30, 2021, Avogadro had approximately $48.3 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Avogadro had working capital approximately $44.6 million as of September 30, 2021, and outstanding bank loans approximately 57.8 million as of September 30, 2021. Our relentless efforts have been paying off with 2021 third quarter results and we look forward to further strengthening the fundamentals and increasing operating leverage and support the long-term profitability of our business. Thank you for participating We look forward to talking with you next quarter. If you have additional questions, please feel free to contact our IR department. Goodbye. Thank you.
spk02: Thank you, Operator. I think we can have our dear Operator to conclude today's conference call. Thank you, everybody. Thank you, Operator. See you next time.
spk03: Thank you. This does conclude today's conference. We thank you for your participation.
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