Ever-Glory International Group, Inc. (EVK) Management on Fourth Quarter 2021 Earnings Call Transcript
Ever-Glory International Group, Inc. (NASDAQ:EVK) Q4 2021 Earnings Conference Call April 13, 2022 8:00 a.m. ET
Jiansong Wang – Chief Financial Officer
Conference call participants
[Call starts abruptly]
Yes, please continue. Your line is open.
Unidentified company representative
Thank you, operator. Good morning everyone and welcome to Ever-Glory International Group’s fourth quarter 2021 earnings conference call. The company distributed its earnings press release earlier today via the Newswire service. You can also download it from the Ever-Glory website at www.everglorygroup.com. With us today, Ever-Glory’s Chief Financial Officer, Mr. Jiansong Wang; Mr. Yihua Kang, CEO of Ever-Glory, is on a business trip today and cannot participate in the call. Mr. Wang will read the remarks prepared on behalf of Mr. Kang.
Before I begin, I will review Safe Harbor’s statement regarding today’s conference call. Please note that today’s discussion will contain forward-looking statements made under the safe harbor of the United States 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 opinion expressed today. Further information regarding this and other risks and uncertainties is included in the Company’s Quarterly Report on Form 10-Q for the third [ph] quarter ended September 13, 2021, Annual Report on Form 10-Q for the fiscal year ended December 31, 2021 and in other filings with the United States Securities and Exchange Commission. Ever-Glory undertakes no obligation to update forward-looking statements except as required by applicable law.
As a reminder, this conference call is being recorded. In addition, an audio webcast of this call will be available on Ever-Glory’s Investor Relations website.
I will now give the floor to Mr. Wang.
Thanks for joining us. Hello to those in the United States and good evening to the participants in Asia. Thank you for participating in our fourth quarter 2021 earnings conference call. We are very pleased to report fourth quarter 2021 results with a 10.7% year-over-year gross margin increase. . Notably, we achieved a year-over-year improvement in gross margin of 25.4% for our wholesale business. Our retail business increased its gross margin by 3.6% compared to the full fiscal year ended December 31, 2021.
On the retail side, our brands continue to attract new customers and retain existing customers with a focus on design, quality and value. Our inventory management strategy has continuously improved the balance between inventory turnover and our diligent cost control measures further strengthen our business profitability. As of December 31, 2021, we operated a nationwide network of 880 stores compared to 936 stores as of December 31, 2020. In 2021, we operated — we celebrated with La go go spokesperson. The effect of the celebration will strengthen the influence of our brand. While we are still seeing stronger demand for products in our retail stores, we continue to see opportunities in e-commerce, viable platforms such as our La go go stores on Tmall and Dangdang.com are being used as a strategic and effective way for us to drive customer engagement, encourage multi-channel shopping, reduce off-season inventory and create a unique and differentiated customer experience to grow our loyal customer base.
The company’s wholesale business is still impacted by COVID-19 and pressure from the economic downturn. We will actively respond to changes in the internal economic environment. With respect to our wholesale business, the company has enhanced its extensive product development and supply chain management business as well as its network of high-quality, reliable and cost-effective supply channels and manufacturers. .
Additionally, our Market Research Center provides our wholesale customers with evidence research and reviews. [ph] in areas including brand positioning, fashion trends, new material development and site redesign. Going forward, we will continue to focus on improving our product development capabilities and customer optimization with our long-term vision to be a leading provider of supply chain solutions for brands. of mid to high-end apparel, both in mainland China and around the world.
This concludes Mr. Kang’s comments. I will now review our financial results for the fourth quarter of 2021. Please note that all figures discussed today are in US dollars unless otherwise specified.
Financial results for the year 2021. Total revenue for the year 2021 was $331 million, an increase of 23.8% compared to $267.4 million for the year 2020. This increase is mainly due to a 57.8% increase in our wholesale activities, partially offset by a 2.7% decline in retail sales. Business. Sales for the company’s branded fashion apparel retail division fell 2.7% to $146.1 million for the full year of 2021, from 150.1 million for the full year 2020. This decrease was primarily due to lower comparable store sales. The Company operated 880 retail stores as of December 30, 2021, compared to 936 retail stores as of December 31, 2020. The Company’s wholesale division sales increased 57.8% to $184.9 million for the full year 2021, compared to $117.2 million for full year 2021. The increase was mainly due to higher sales in Mainland China, Hong Kong, China, Europe-others, Japan and the United States.
Total gross margin for the full year 2021 increased 10.7% to $101 million from $91.2 million for the full year 2020. Total gross margin for the full year 2021 declined to 30.5% from 34.1% for full year 2020. Retail gross profit increased 3.6% to 63.7 million full year 2021 compared to $61.5 million for full year 2020. Gross margin for full year 2021 was 43.6% compared to 40.9% for full year 2020. wholesale gross profit increased 25.4% to $37.3 million for the full year of 2021, from $29.7 million for the full year of 2020. The margin Gross for the full year of 2021 decreased to 20.2% from 25.4% for the full year of 2020.
Selling expenses for full year 2021 increased 12.8% to $64.1 million [ph] or 19.1% of total sales, compared to $55.9 million or 20.9% of total sales for the full year 2020. The increase is attributable to higher travel expenses. General and administrative expenses for the full fiscal year 2021 increased 23.2% to $38.4 million or 11.6% of total sales, compared to $31.2 million or 11.7% of total sales for the full fiscal year of 2020. This increase is attributable to the increase in salaries. Operating loss revenue was negative $0.5 million for the full year of 2021, compared to $4.1 million for the full year of 2020.
Net loss attributable to the company for the full year 2021 was negative $0.09 million, compared to $3.3 million for the full year 2020. The basic and diluted loss per share was negative $0.01 for the full year of 2021, compared to $0.22 for the full year. of 2020. As of December 31, 2021, Ever-Glory had approximately $59.9 million [ph] cash and cash equivalents to approximately $81.9 million as of December 31, 2020, Ever-Glory had approximately $51 million in working capital as of December 31, 2021 and outstanding bank loans. approximately $69 million as of December 31, 2021.
Our tireless efforts have paid off with fourth quarter 2021 results and we look forward to further strengthening fundamentals and increasing operating leverage to support the long-term profitability of our business.
Thank you for participating in Ever-Glory’s Q4 2021 Earnings Call. We look forward to talking with you next quarter. If you have any additional questions, please do not hesitate to contact our IR department. Goodbye. Thank you. Thank you, operator.
That will end today’s conference call. Thank you for your participation, ladies and gentlemen. You can now log out.
End of Q&A