Sales skyrocket at Chinese garment retailer Ever-Glory

Ever-Glory International Group Inc, a leading apparel supply chain manager and retailer based in China, reported its financial results for its fiscal year ended December 31, 2011.

During the fiscal year ended December 31, 2011, net sales increased 60.9% to $215.8 million from $134.1 million in 2010. The increase was attributable to increased sales in both Ever-Glory's retail and wholesale businesses.

In 2011, retail sales from LA GO GO, the Company's branded retail division, increased 82.7% to $53.5 million, compared to $29.3 million in 2010. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 467 LA GO GO stores as of December 31, 2011, compared to 293 LA GO GO stores at December 31, 2010. Currently, there are LA GO GO stores in more than 20 provinces in China.

In 2011, sales generated from the Company's wholesale business increased 54.7% to $162.2 million, compared to $104.8 million in 2010. This increase was primarily attributable to increased sales in the PRC, the United Kingdom and the United States. The increased sales in the wholesale segment were primarily due to the following factors:

(i) The progressive adjustment of the Company's wholesale client and product portfolio has resulted in an increase in wholesale orders; (ii) In response to the global economic uncertainty, in mid-2010 we adjusted our sales strategy to develop more wholesale business in China. (iii) Increased production capacity thanks to continued expansion of the Company's outsourcing base to Vietnam and Cambodia starting from the third quarter of 2010.

"We're very pleased with the significant progress we made in 2011, as sales in both our retail and wholesale segments continued to increase," commented by Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory.

"We are especially encouraged by achieving the objectives of LA GO GO store expansion. As of December 31, 2011, we had 467 LA GO GO stores in China; we surpassed our goal of opening an additional 80 to 100 new stores in 2011! We had 293 stores at the end of 2010."

"For 2012 , we see our basic strategies of retail business as unchanged, we will continue to develop LA GO GO through perfecting design styles, improving store management efficiency and opening more stores in desired locations," continued Mr. Kang. "We are confident that, continuing to pursue these measures, we can enhance same-store sales, expand LA GO GO's market penetration and increase its brand position in China."

In 2011, gross profit in Every-Glory's retail business increased 81.6% to $18.3 million from $10.1 million in 2010. Gross margin for the retail business slightly decreased to 34.1% in 2011 compared to 34.3% in 2010.

In 2011, gross profit in Every-Glory's wholesale business increased 63.2% to $26.3 million from $16.1 million in 2010. Gross margin for the wholesale business increased to 16.2% in 2011 compared to 15.4% in 2010. The increase in gross margin was primarily due to lower outsourced manufacturing costs.

Total gross profit in 2011 increased 70.3% to $44.5 million from $26.2 million in 2010. Gross margin increased to 20.6% in 2011, compared to 19.5% in 2010.

Selling expenses were $18.1 million in 2011, an increase of $8.4 million compared to 2010. As a percentage of sales, selling expense accounted for 8.4% of our total sales in 2011, an increase of 1.1% compared to 7.3% in 2010. The increase was attributable to the enlarged number of retail employees and higher average salaries, as well as the increased store decoration and marketing expenses associated with the promotion of LA GO GO.

General and administrative expenses were $14.3 million in 2011, an increase of $4.6 million compared to 2010. As a percent of sales, general and administrative expenses accounted for 6.6% of our total sales in 2011, a decrease of 0.7% compared to 7.3% in 2010.

The increase in total general and administrative expenses was attributable to an increase in payroll for additional management, and design and marketing staff as a result of the Company's business expansion. The decrease in general and administrative expenses as a percentage of total sales was due to the increase in the Company's sales.

Income from operations increased 82.2% to $12.1 million in 2011 from $6.6 million in 2010.

For 2011, GAAP net income attributable to the Company was $9.6 million or $0.65 per diluted share, an increase of 45.1% from $6.7 million, or $0.45 per diluted share in 2010. GAAP net income attributable to the Company results for 2011 include approximately $0.2 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability compared to approximately $1.0 million, or $0.07 per diluted share, of non-cash income related to the change in fair value of a derivative liability in 2010. Excluding this non-cash items for 2011 and 2010, non-GAAP diluted earnings per share were $0.64 in 2011 compared to $0.38 in 2010.

Based in Nanjing, China, Ever-Glory International Group, Inc. is a leading apparel supply chain manager and retailer in China.