Chinese electronics retailer China 3C Group announced financial results for the first quarter ended March 31, 2008 and said net sales for the first quarter 2008 totaled a meager US$68.2 million compared to US$84.5 million for the same period of last year.
Zhenggang Wang, chairman and CEO of the company, attempted to put a positive spin on the dismal quarter in a prepared statement, "While the first quarter was clearly a challenging period for our company for a number of reasons including rising raw material costs, increased competition, and the severe snow storms in January that decreased store traffic and disrupted our supply chain, we were pleased to have increased our net income margin and believe that the remaining three quarters of 2008 will be more productive for our business. We were pleased to maintain Q1 general and administrative expenses as a percentage of revenue on the same level as a year ago. This is a result of our strategy for 2008 of improving efficiency and profitability per store as opposed to pursuing rapid expansion as we have in the past."
The company says this dramatic 19.4% sales decrease was primarily attributable increased competition and to supply chain disruptions from winter storms that impacted the company's ability to replenish product at its retail outlets. Gross profit margin for the first quarter 2008 was US$10.5 million compared to US$13.9 million in the prior year period. First quarter 2008 gross profit margin was 15.5% compared to 16.5% for the prior year period. The decrease was largely due to a higher level of concession fees paid to retail partners on lower overall sales and increased transportation costs.
Net income was US$5.8 million, or 8.4% of net sales for the first quarter of 2008 compared to US$6.5 million, or 7.6% of net sales for the first quarter of 2007. Diluted earnings per share were US$0.11 compared to US$0.12 in the prior year period.