LJ (JADE) meets consensus EPS estimates, provides weak Q1 guidance, slows China expansion, stock down 19% (4Q04 earnings)

Mar.27.05 | About: LJ International, (JADE)

LJ International (ticker: JADE), a Hong Kong and US company engaging in the design, branding, marketing and distribution of jewelry, met Q4 2004 diluted EPS estimates of $0.06. But, it provided weak guidance for Q1 2005, and drastically lowered last month's expectations for China retail store openings in 2005. More details:


Q4 2004:
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Revenue increased 35% to $25
    million.
  • Net income increased 23% to $728,000.
  • EPS was
    $0.06 per fully diluted share vs $0.05 per share.

CEO Yu Chuan Yih commented:

....the results for 2004 are
gratifying not only because they show strong growth, but also because they
show that LJI is continuing to expand sales sharply in its established markets
even as it moves into new ones.  We continue to enjoy solid relationships with
our major customers, most of whom are continuing to expand their business with
us.  These include the three largest U.S. home-shopping networks, two-thirds
of the largest U.S. jewelry chains as well as some of the world's largest
retailers.  Each of these new customers has the potential to match or exceed
our top customer as a buyer of our products. 

And, of course, there's China.
As we build upon our longstanding sales base, we will open new outlets in
China, where we will see new revenue contributions for the first time in
2005.''

Q1 2005 Guidance:

  • Revenue between $14.5 and $16
    million.
    • A survey of 2 analysts projected revenue of $15.63 million and $18.1 million.
  • Net income decrease of 11% vs Q1 2004 to $375,000.
  • Diluted EPS of $0.03 compared to $0.04 in Q1 2004.
    • Analysts were expecting diluted EPS between $0.04 and $0.06.
  • JADE expects to open 4 new stores in 2005.
    • This conflicts with February's pre-announcement that the company would open 10 stores in 2005.

JADE's stock market performance:
Jade326