China Nepstar Chain Drugstore Ltd.
Chin Nepstar is China's largest retail drugstore chain based on the number of directly operated stores. Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide its customers with high-quality, professional and convenient pharmacy services and a wide variety of other merchandise, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products including consumables.
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Drugstore chain China Nepstar same store sales climb 7% in first quarter
China focused, US listed drugstore chain China Nepstar Chain Drugstore (“China Nepstar”)(NYSE:NPD) continued to reported a 6.9% increase in same store sales from its 2,559 directly operated stores.
The drugstore owner chalked up a 12% increase in first quarter
revenues to US$83 million (RMB567 million) as same store sales increased
6.9%. First quarter revenue contribution from prescription drugs was
24.8%, over-the-counter drugs was 36.7%, nutritional supplements was
17.9%, traditional Chinese herbal products was 3.7% and other products
was 16.9%. China Nepstar's portfolio of private label products included
1,559 products as of March 31, 2010. Sales of private label products
represented approximately 26.6% of revenue and 39.8% of gross profit for
the first quarter of 2010.
Net income and net cash flow numbers were less impressive
however, as the company felt the brunt of pricing ceiling policies in
China. Net income in Q1 came in at US$0.4 million, while net cash flow
from operations was US$5 million.
"Despite the unfavorable pressure brought by the various pricing
ceiling policies on some of our products, we continue to achieve solid
same store sales growth as our product mix offerings and promotion
programs remain attractive to our customers,” Ian Wade, Chief Executive
Officer of China Nepstar, commented.
Gross margin for the first quarter of 2010 was 48%, as compared
to 48.2% for the same period in 2009.
Sales, marketing and other operating expenses as a percentage of
revenue for the first quarter of 2010 increased to 42.9% compared to 41%
for the first quarter of 2009, largely due to the impact of additional
store openings and an increase in salaries for store employees.
As of March 31, 2010 cash, and cash equivalents were US$167
million.
Looking ahead, the drugstore operator remained cautious, citing
concern over minimum wage policies which were coming into effect in many
provinces, and inflationary pressures on rental costs.
"Such cost pressure is calling for us to focus even more on the
productivity of the stores,” Wade noted.
"We remain hopeful that the recent pricing policy by the Chinese
government will shake out a number of small competitors who have already
been suffering loss in the past few quarters."
Other China Nepstar Chain Drugstore Ltd. news
- China Nepstar acquires eight stores in Wenzhou
2009-10-26 - Drugstore Nepstar moves into Beijing with five stores
2009-07-14
