Retailing, Franchising, and Consumerism Business Intelligence in China

ENZO Retail Units Exceed 2006 Goal For China

LJ International says that its jewelry retail division, ENZO, has exceeded its 2006 target for store-count growth and has met its goal for earnings before interest, taxes, depreciation and amortization in China.

As of December 31, 2006, ENZO had a total of 42 retail outlets operating in China, Hong Kong and Macau. This exceeds the target of 40 stores that LJI announced most recently in August 2006. LJI says it continues on track to meet or exceed its goal of opening at least 100 stores by the time of the Beijing Olympics in the summer of 2008.

In terms of financial performance, ENZO has now passed a key milestone, positive EBITDA. Based on preliminary results for the fourth quarter ending December 31, 2006, it is expected to record positive EBITDA and operating profit, following negative EBITDA and operating profit in the prior quarter. This meets the target announced in June 2006 for breakeven EBITDA by the end of 2006.

LJI Chairman and CEO Yu Chuan Yih commented, "This has been a highly successful year for our ENZO retail division, which made the key transition to positive EBITDA and is well on its way to meeting our goal of full profitability on a net, stand-alone basis by the end of 2007. We are pleased, too, that ENZO is not only opening new stores at a rapid pace but is seeing large increases in revenues that point to healthy growth on a same-store basis. The division is on track to meet its 100-store target by the time of the Beijing Olympics and its 2008 revenue goal of US$40 million. In the nearer term, the outlook for 2007 is looking better than ever. We expect soon to be providing new guidance for that year, along with the fourth quarter of 2006."

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