Chinese Jewelry Retail Chain Announces Results

LJ International revised upward its revenue and earnings guidance for its fourth quarter and year ended December 31, 2005. The company attributed its increased guidance to better-than-expected growth in both its core business in the U.S. as well as its new ENZO retail stores in China.

For the fourth quarter ended December 31, 2005, LJI expects to report record revenues of more than US$32 million and net income of more than US$1.3 million, or US$0.08 per fully diluted share.

For the full year 2005, LJI expects revenues of at least US$95 million and net income of more than US$3.0 million, or US$0.23 per fully diluted share.

These upward revisions exceed the prior guidance given by the company in December 2005, when it projected fourth-quarter 2005 revenues of US$26 million to US$27 million ($89 million to US$90 million for the full year 2005) and earnings per fully diluted share of between US$0.07 and US$0.08 ($0.22 to US$0.23 for the full year).

Compared to the same period last year, for the fourth quarter ended December 31, 2005, LJI expects revenues to increase by at least 28%, net income to increase by approximately 80% and earnings per share on a fully-diluted basis to increase by at least 50%, despite a substantial increase in shares outstanding.

The company also released initial financial results for its ENZO Division, which has in less than two years grown to become the largest foreign-branded retail chain of jewelry stores in China, ahead of Tiffany & Company, which is well behind ENZO's pace of new store openings.

LJI attributed its better-than-expected initial market acceptance for ENZO to its first-mover advantage in China, aggressive advertising, marketing and brand building campaigns as well as lack of foreign competition. These initiatives, among others to be disclosed later, helped drive significant initial consumer traffic to ENZO's retail stores before Chinese New Year, the country's busiest retail season of the year.