SOURCE: China 3C Group

August 07, 2006 08:00 ET

China 3C Group Reports Second Quarter 2006 Financial Results

ZHEJIANG, CHINA -- (MARKET WIRE) -- August 7, 2006 -- China 3C Group (OTCBB: CHCG), the parent company of Zhejiang Yong Xin Digital Technology Co., Ltd., today reported financial results for its second quarter ended June 30, 2006.

Net revenues for the 3 months ended June 30, 2006 totaled $28,618,196, compared to revenues of $9.12 million for second quarter 2005, an increase of 213.7%. It is a 112.7% increase compared to $13,450,749 for the 3 months ended March 31, 2006. The increase was due to increased sales volume from new products and existing products during the 3 months ended June 30, 2006.

Net income for the 3 months ended June 30, 2006 was $2,262,695, compared to a net income of $693,000 for the same quarter last year, an increase of 226.5%. It is a 147.6% increase compared to $913,548 for the 3 months ended March 31, 2006. The increase in percentage was due to slight increase in gross profit margin and decrease in cost.

Cost of sales for the 3 months ended June 30, 2006 totaled $24,347,343 or approximately 85.08% of net sales compared to $11,520,281 or approximately 85.65% for the 3 months ended March 31, 2006. The cost of sales as a percentage remains stable during the 3 months ended June 30, 2006.

Gross profit margin for the 3 months ended June 30, 2006 was 14.92% compared to 14.35% for the 3 months ended March 31, 2006. The gross profit margin remains stable during the 3 months ended June 30, 2006.

General and administrative expense for the three months ended June 30, 2006 totaled $903,938 or approximately 3.16% of net sales, compared to $505,052 or approximately 3.75% for the 3 months ended March 31, 2006. The decrease of 0.59% was due to the benefit from scale of operations in that the increment in net sales is higher than the increment in overall general and administrative expenses.

Mr. Zhenggang Wang, Chief Executive Officer, stated, "We are very pleased with our outstanding performance for the second quarter. Our company is continuing to gain market share and the introduction of new products in the market place is being well received. We expect to experience increasing revenues and profitability for the balance of second half of 2006."

About China 3C Group

China 3C Group is a leading retail chain operating over 600 independent stores in Eastern China. The Company specializes in selling 3C products (communication products, information technology products, and digital products) in China through its subsidiary Zhejiang Yong Xin Digital Technology Co., Ltd. Among China 3C's primary attributes is its efficient distribution network and rapid logistics system. The Company's goal is to become the number one retailer of 3C products in China.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.

This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slow down affecting technology companies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-KSB, recent and forthcoming Quarterly Reports on Form 10-QSB, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Contact Information

  • At Company:
    Jincheng (Jason) Yuan
    Vice President
    Tel: 201-963-6764
    Fax: 201-963-6794
    Email: Email Contact
    Website: www.China3CGroup.com

    At Financial Relations Board:
    Marilynn Meek
    General: 212-827-3773
    Julie Tu
    Analysts: 212-827-3776