Apparel retail sales zoom 74.4% at Ever-Glory in Q3

Total sales for the quarter were $106.7 million, an increase of 54% compared to $69.3 million in the third quarter of last year. This increase was primarily attributable to increased sales in Ever-Glory's retail business as well as wholesale business.

Retail sales for the quarter from LA GO GO, Ever-Glory's branded retail division, increased 74.4% to $42.5 million, compared to $24.4 million for the same period last year. This increase was primarily due to the increase in new stores opened and increase in same store sales. Ever-Glory had 904 LA GO GO stores as of September 30, 2013, compared to 644 LA GO GO stores as of September 30, 2012.

Wholesale sales generated from Ever-Glory's wholesale business for the quarter increased 42.9% to $64.2 million, compared to $44.9 million for the same period last year. This increase was primarily attributable to increased sales in the United Kingdom, United States, Europe-Other and the People's Republic of China.

Total gross profit for the quarter was $25.4 million, or 23.8% of total sales, compared to $15.3 million, or 22.1% of total sales for the same period last year.

Selling expenses for the quarter increased 65.5% to $14.2 million compared to $8.6 million for the same period last year. As a percentage of sales, selling expenses increased to 13.3% compared to 12.4% for the same period last year. The increase was attributable to the increased number of retail employees and increased average salaries, as well as increased store decoration and marketing expenses associated with the promotion of the LA GO GO brand.

General and administrative expenses for the quarter increased 61.0% to $6.7 million compared to $4.2 million for the same period last year. As a percentage of sales, general and administrative expenses increased to 6.3% compared to 6.0% for the same period last year. The increase was attributable to an increase in the number of wholesale and retail management personnel.

Income from operations for the quarter increased 74.1% to $4.5 million compared to $2.6 million for the same period last year. As a percentage of sales, income from operations accounted for 4.2% of Ever-Glory's total sales for the quarter, an increase of 0.5% compared to 3.7% last year.

For the third quarter, net income was $3.9 million, or $0.26 per diluted share, an increase of 70.8% from $2.3 million, or $0.15 per diluted share in the third quarter of 2012. Net income in the third quarter of 2012 includes approximately $0.1 million of non-cash income related to the change in fair value of a derivative liability. There was no such liability in the third quarter of 2013.

Balance Sheet and Cash Flow

As of September 30, 2013, Ever-Glory had approximately $11.7 million of cash and cash equivalents, compared to approximately $9.4 million as of December 31, 2012. Ever-Glory had working capital of approximately $30.3 million as of September 30, 2013, and outstanding bank loans of approximately $48.3 million as of September 30, 2013.