LOS ANGELES, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Nova Lifestyle, Inc. (NASDAQ: NVFY)(“Nova LifeStyle” or the “Company”) today announces its financial results for the quarter ended June 30, 2019.
Tawny Lam, Chairperson and Chief Executive Officer of Nova LifeStyle, stated, "I am pleased to announce that we are executing on our revised business plan, and I want to put our operating results for the quarter ended June 30, 2019 in context. At the end of 2018 and the beginning of 2019, we commenced a transition of our business. We began moving away from low cost, low margin products to a mix of products that appeal to a higher-end ultimate consumer. This move is intended to improve our gross profit margin, collections and net profitability, and to increase our return on equity, over the long-term. We determined to terminate sales and marketing efforts to customers that represented high purchase volume but low profit margin, and we adjusted our product line, which included the launch of our Summer 2019 Collection in the Las Vegas Market with a view to attracting a higher-end ultimate customer."
“We believe these new strategies and our recent launch of our Summer 2019 Collection will provide us with significant long term growth opportunities. Not unexpectedly, the transition adversely impacted our revenue and our net profit in the short-term as we rolled out new products and marketed those products to our existing client base and to new potential customers better suited for the higher end products, and as we assessed our new products’ market acceptance. Our operating results for the period ended June 30, 2019 also reflect the negative impact of the trade tariffs imposed by the United States on certain products manufactured in China,” concluded Ms. Lam.
In response to the tariffs imposed by the United States, we are attempting to shift a portion of our product manufacturing from third party manufacturers located in China to third party manufacturers located in other parts of Asia, such as Vietnam, India and/or Malaysia, countries unaffected by the tariffs. Of course it takes substantial lead time to implement a relocation of manufacturing (which by necessity includes an assessment of the factory’s ability to deliver the quantity of the product, in accordance with the Company’s specifications, and in accordance with the Company’s quality control requirements), but we expect that a portion of our manufacturing will be transitioned to one or more of these venues during 2019. Some of our manufacturing will continue to be performed in China because the intellectual know-how necessary to manufacture certain products is not generally available in other Asian countries.
Key Financial Highlights:
- Net sales for three months ended June 30, 2019 were $4.59 million, a decrease of 81% from $24.11 million in the same period of 2018.
- Net loss for the three months ended June 30, 2019 was $38 thousand, as compared to a profit of $1.3 million in the same period of 2018.
- Net sales for the six months ended June 30, 2019, were $15.25 million, a decrease of 67% from $46.41 million in the same period of 2018.
- Net loss for the six months ended June 30, 2019 was $185 thousand, as compared to a profit of $3 million in the same period of 2018.
- Repurchased approximately 463 thousand shares in accordance with the share repurchase program announced on June 11, 2019.
About Nova LifeStyle
Nova LifeStyle, Inc. is a well established, innovative designer and distributor of modern lifestyle furniture; primarily sofas, dining room furniture, cabinets, office furniture and related components, bedroom furniture, and various accessories, in matching collections. Nova's family of brands include Diamond Sofa and Bright Swallow. Nova's products feature urban contemporary styles that integrate comfort and functionality, incorporating upscale luxury designs which appeal to middle and upper middle-income consumers in the USA, China, Europe, and elsewhere in the world.
Visit Nova LifeStyle's website at www.NovaLifeStyle.com.
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our financial targets for our consolidated adjusted EBITDA and free cash flow, our expected future growth prospects and our exploration of acquisition opportunities. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.