Ever-Glory Reports Second Quarter 2022 Financial Results

Ever-Glory International Group, Inc. (the “Company” or “Ever-Glory”) (NASDAQ: EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, reported its financial results for the second quarter ended June 30, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “During the second quarter, we maintained our focus on developing the retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio and enhancing our account receivables.”

“During the second quarter of 2022, our retail brands continue to attract new customers and retain existing customers by focusing on design, quality and value,” Mr. Kang continued. “We operated a nationwide network of 816 stores as of June 30, 2022.”

“Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward, we will implement a stricter client evaluation system and remain diligent in our account receivables collection. We believe the enduring strength of our wholesale business will support its long-term profitability,” Mr. Kang concluded.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, “The second quarter results are coupled with our ability to increase operating leverage. Going forward, we remain confidence in the long-term prospects of our business and we will continue implementing our margin enhancement and cost control measures to further strengthen the profitability of our business.”

Second Quarter 2022 Financial Results

Total sales for the second quarter of 2022 were $63.8 million,  an increase of 5.4% from $60.6 million in the second quarter of 2021. This increase was primarily attributable to a 60.5% ($16.0 million) increase in our wholesale business, offset by a 37.3% ($12.7 million) decrease in our retail business.

Sales for the Company’s branded fashion apparel retail division decreased by 37.3% to $21.4 million for the second quarter of 2022, compared to $34.1 million for the second quarter of 2021. This decrease was primarily due to outbreak of COVID-19. The outbreak in China resulted in the reduction of customer traffic and temporary closures of shopping malls as mandated by the provincial governments in various provinces of China, which had adversely affected our retail business with a decline in sales.

Sales for the Company’s wholesale division increased by 60.5% to $42.4 million for the second quarter of 2022, compared to $26.4 million for the second quarter of 2021. This increase was primarily attributable to an increase in sales in Mainland China, Hong Kong, the United Kingdom, Europe and the United States, partially offset by a decrease in sales in Japan.

Total gross profit for the second quarter of 2022 increased by 11.0% to $20.4 million, compared to $18.4 million for the second quarter of 2021. Total gross margin for the second quarter of 2022 increased to 32.0% from 30.4% for the second quarter of 2021.

Gross profit for the retail business decreased by 16.0% to $12.4 million for the second quarter of 2022, compared to $14.8 million for the second quarter of 2021. Gross margin for the second quarter of 2022 was 58.1% compared to 43.4% for the second quarter of 2021.

Gross profit for the wholesale business increased by 122.1% to $8.0 million for the second quarter of 2022, compared to $3.6 million for the second quarter of 2021. Gross margin for the second quarter of 2022 increased to 18.8% from 13.6% for the second quarter of 2021.

Selling expenses for the second quarter of 2022 decreased by 19.5% to $11.7 million, or 18.3% of total sales, compared to $14.5 million, or 24.0% of total sales for the second quarter of 2021. The decrease was attributable to the decreased average salaries and decreased business trips.

General and administrative expenses for the second quarter of 2022 decreased by 27.9% to $5.5 million, or 8.7% of total sales, compared to $7.7 million, or 12.7% of total sales for the second quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.

Income (loss) from Operations was $3.2 million for the second quarter of 2022, compared to  ($3.8 million)  for the second quarter of 2021.

Net income (loss) for the second quarter of 2022 was $2.4 million compared to ($1.8 million) for the second quarter of 2021. Basic and diluted loss per share were $0.16 for the second quarter of 2022 compared to ($0.12) for the second quarter of 2021.

Balance Sheet

As of June 30, 2022, Ever-Glory had approximately $32.9 million of cash and cash equivalents, compared to approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $51.3 million as of June 30, 2022, and outstanding bank loans of approximately $65.6 million as of June 30, 2022.