Form 6-K China Nepstar Chain Drug For: Nov 26

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

�

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FORM 6-K

�

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REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

�

For the month of November 2014

�

Commission Filing Number: 001-33751

�

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CHINA NEPSTAR CHAIN DRUGSTORE LTD.

(Translation of registrant’s name into English)

�

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6^th Floor, Tower B, Xinnengyuan Building

Nanhai Road, Nanshan District. Shenzhen

Guangdong Province 518054

People’s Republic of China

(Address of principal executive offices)

�

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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

�

Form 20-F x Form 40-F �

�

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

�

Yes � No x

�

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

�

Yes � No x

�

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�

EXHIBIT INDEX

�

Number	�	Description of Document
�	�
99.1	�	Press Release
99.2	�	Press Release

�

�

SIGNATURE

�

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

�

�	CHINA NEPSTAR CHAIN DRUGSTORE LTD.
�	�	�	�
�	�	�	�
�	By:	/s/Zixin Shao	�
�	Name: Zixin Shao		�
�	Title: Chief Financial Officer		�

�

Date: November 26, 2014

�

�

�

Exhibit 99.1

�

�

China Nepstar Chain Drugstore Ltd. Reports Third Quarter 2014 Financial Results

�

SHENZHEN, China,�Nov 26, 2014�—�China Nepstar Chain Drugstore Ltd.�(NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced its unaudited financial results for the third quarter ended�September 30, 2014.

�

Financial Highlights

�

For the quarter ended�September 30, 2014:

�

�

Same store sales increased by 8.1% compared to the third quarter of 2013

�

Revenue increased by 8.1% to RMB738.3 million�(US$120.3 million) compared to RMB683.2 million in the third quarter of 2013

�

Net loss was RMB13.1 million�(US$2.1 million) compared to net loss of RMB4.7 million in the third quarter of 2013

�

Mr.�Fuxiang Zhang, Chief Executive Officer of China Nepstar, commented. "We are pleased by the continuous momentum in same store sales. Our promotional campaigns for pharmaceutical products are driving growth in sales as well as average transaction value. Moreover, our store optimization strategy has created a network of stores with steadily increasing sales, enabling us to expand top line sales at a consistent pace. Our next goal will be improving gross profit.”

�

Third Quarter Results

�

During the third quarter of 2014, the Company opened 48 new stores and closed 48 stores. As of�September 30, 2014, the Company had a total of 2,048 directly operated stores.

�

Revenue for the third quarter of 2014 increased by 8.1% to�RMB738.3 million�(US$120.3million) from�RMB683.2 million�for the same period in 2013. Same store sales (for the 1,847 stores opened before�December 31, 2012 and which were operating as of September 30, 2014) for the third quarter of 2014 increased by 8.1% compared to the same period in 2013. The increase in revenue and same store sales was primarily due to in-store promotional initiatives and marketing efforts for pharmaceutical products.

�

�

Third quarter revenue contribution by product category was 22.7% from prescription drugs (23.1% for the same period in 2013); 38.7% from over-the-counter ("OTC") drugs (38.2% for the same period in 2013); 13.6% from nutritional supplements (15.0% for the same period in 2013); 4.0% from herbal products (3.9% for the same period in 2013); and 21.0% from convenience and other products (19.8% for the same period in 2013).

�

Third quarter gross profit was�RMB298.3 million�(US$48.6 million) compared to RMB289.6 million�in the same period of 2013. Gross margin in the third quarter of 2014 was 40.4%, compared with 42.4% in the same period of 2013. The decrease in gross margin was mainly the result of implementing product promotion initiatives.

�

The Company's portfolio of private label products expanded to 2,146 types of products as of�September 30, 2014. Sales of private label products represented approximately 16.8% of the revenue and 24.5% of the gross profit for the third quarter of 2014.

�

Sales, marketing and other operating expenses as a percentage of revenue decreased slightly to 37.9% for the third quarter of 2014 from 38.3% for the same period of 2013, although the absolute value of sales, marketing and other operating expenses increased a little for the third quarter of 2014.

�

General and administrative expenses as a percentage of revenue were 4.1% for the third quarter of 2014 compared to 5.2% for the same period of 2013. This decrease was mainly due to a penalty charge of RMB5.7 million imposed by the Price Bureau of Yuexiu District in Guangzhou City of Guangdong Province on our subsidiary, Guangzhou Nepstar Chain Co., Ltd. for noncompliance with certain pricing guidelines for the third quarter of 2013. The Company’s efforts to streamline managerial personnel also contributed to the decrease.

�

Loss from operations in the third quarter of 2014 was RMB13.1 million�(US$2.1 million) compared with loss from operations of RMB8.5 million�in the same period of 2013. This increase was mainly due to the increase in cost of goods sold, which outpaced increases in revenue and sales, marketing and other operating expenses.

�

�

Interest income for the third quarter of 2014 was�RMB1.5 million�(US$0.2 million), compared with�RMB3.9 million�for the same period of 2013.

�

The Company recorded a one-time gain from the disposal of subsidiaries of RMB3.0 million (US$0.5 million) in the third quarter of 2014, due to completion of the transfer of 100% ownership in the Company’s subsidiary, Weifang Nepstar Pharmaceutical Co., Ltd., to an independent third party.

�

The Company's income tax expense was�RMB4.5 million�(US$0.7 million) for the third quarter of 2014, compared with RMB3.1 million�for the same period in 2013. Loss before income tax expense for the third quarter of 2014 was�RMB8.7 million�(US$1.4 million) compared to RMB1.6 million for the same period in 2013. The effective tax rate for the third quarter of 2014 was negative 51.6%, compared to negative 196.6% for the same period in 2013. This difference in effective income tax rate was primarily attributable to higher operating losses from certain of our loss-making subsidiaries in the third quarter of 2014, for which full valuation allowances were made on their deferred tax assets.

�

Net loss for the third quarter of 2014 was�RMB13.1 million�(US$2.1 million), or RMB0.13 (US$0.02) basic and diluted loss per ADS, compared to net loss of RMB 4.7 million, or RMB0.05 basic and diluted loss per ADS for the third quarter of 2013. As of September 30, 2014, the Company had 197.4 million outstanding ordinary shares. Each ADS represents two ordinary shares of the Company.

�

In the third quarter of 2014, net cash outflow generated from operating activities were�RMB1.2 million�(US$0.2 million), compared to net cash inflow of RMB10.6 million for the same period in 2013. This difference is primarily due to greater operating losses incurred during the third quarter of 2014 compared to the same period in 2013.

�

As of�September 30, 2014, the Company's total cash, cash equivalents, short-term and long-term bank deposits and restricted cash were�RMB288.3 million (US$47.0 million) and its shareholders' equity was�RMB798.2 million�(US$130.0 million), compared with total cash, cash equivalents, bank deposits and restricted cash of�RMB622.8 million and shareholders' equity of RMB845.5 million as of December 31, 2013. The decrease in the Company’s total cash, cash equivalents, short-term and long-term bank deposits and restricted cash was primarily due to the payment of a cash dividend of approximately RMB191.2 million (US$31.6 million) to shareholders in January 2014 and the net cash outflow of RMB102.8 million (US$16.8 million) from operating activities for the nine months ended September 30, 2014.

�

�

Business Outlook

�

“As we head into the fourth quarter during which we usually perform well, we anticipate continued growth in the sales of both pharmaceuticals and nutritional products, enabling the improvement of gross profit,” commented Mr. Zhang. “Looking ahead, China is gradually trending towards deregulation on pharmaceutical pricing after several years of vigorous implementation of stringent price controls. We believe this trend will be favorable for the healthcare retail sector in general, and we plan to capitalize on opportunities to realign pricing with the growing cost of goods.”

�

Conference Call Information

�

The Company will host a conference call, to be simultaneously webcasted, on�Wednesday, November 26, 2014�at�8:00 a.m. Eastern Standard Time�/�9:00 p.m.�Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-9210 (North America) or +1-201-689-8049 (International) approximately five minutes before the call start time. A live web cast of the conference call will be available on the Nepstar website at�www.nepstar.cn.

�

A replay of the call will be available shortly after the conclusion of the conference call through�December 4, 2014�at�11:59 p.m. Eastern Standard Time. An archived web cast of the conference call will be available on the Nepstar website at http://www.nepstar.cn. Interested parties may access the replay by dialing +1-877-660-6853 (North America) or +1-201-612-7415 (International) and entering conference ID number 13594785.

�

About China Nepstar Chain Drugstore Ltd.

�

China Nepstar Chain Drugstore Ltd.�(NYSE: NPD) is a leading�retail drugstore chain in�China. As of�September 30, 2014, the Company had 2,048 directly operated stores across 77 cities, one headquarter distribution center and 16 regional distribution centers in�China. Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide its customers with high-quality, professional and convenient pharmaceutical products and services and a wide variety of other merchandise, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products. Nepstar's strategy of centralized procurement, competitive pricing, customer loyalty programs and private label offerings has enabled it to capitalize on the continuing economic growth in�China�and take advantage of the demographic trend in�China�to achieve a strong brand and leading market position. For further information, please go to�http://www.nepstar.cn.

�

�

Safe Harbor Statement

�

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's strategic operational plans and business outlook, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the�U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

�

Exchange Rate Information

�

The United States�dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into�United States�dollars were calculated at the certified exchange rate of US$1.00�=�RMB6.1380�on�September 30, 2014�as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate or at any other date. The percentages stated are calculated based on RMB amounts.

�

Contacts

�

Zixin Shao

China Nepstar Chain Drugstore Ltd.

Chief Financial Officer

+86-755-2641-4065

[email protected]

�

�

Dixon Chen

Grayling

Investor Relations

+1-646-284-9403

[email protected]

�

(Tables Follow)

�

�

China Nepstar Chain Drugstore Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)

(amounts in thousands – except per-share and per-ADS data)

�

�

�

Three-month period ended

�

�

�

September 30,

�

�

�

2013

�

�

2014

�

�

2014

�

�

�

RMB

�

�

RMB

�

�

USD

�

�

�

�

�

�

�

�

�

�

�

Revenue

�

�

683,156

�

�

�

738,334

�

�

�

120,289

�

Cost of goods sold

�

�

(393,519

)

�

�

(440,022

)

�

�

(71,688

)

Gross profit

�

�

289,637

�

�

�

298,312

�

�

�

48,601

�

Sales, marketing and other operating expenses

�

�

(261,485

)

�

�

(279,496

)

�

�

(45,535

)

General and administrative expenses

�

�

(35,565

)

�

�

(30,173

)

�

�

(4,916

)

Impairment losses

�

�

(1,047

)

�

�

(1,740

)

�

�

(283

)

Loss from operations

�

�

(8,460

)

�

�

(13,097

)

�

�

(2,133

)

Interest income

�

�

3,891

�

�

�

1,487

�

�

�

242

�

Dividend income from cost method investments

�

�

2,999

�

�

�

-

�

�

�

-

�

Gain from disposal of subsidiaries

�

�

-

�

�

�

2,956

�

�

�

482

�

Loss before income tax expense

�

�

(1,570

)

�

�

(8,654

)

�

�

(1,409

)

Income tax expense

�

�

(3,087

)

�

�

(4,467

)

�

�

(728

)

Net loss

�

�

(4,657

)

�

�

(13,121

)

�

�

(2,137

)

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic losses per ordinary share

�

�

(0.024

)

�

�

(0.066

)

�

�

(0.011

)

Basic losses per ADS

�

�

(0.047

)

�

�

(0.132

)

�

�

(0.022

)

Diluted losses per ordinary share

�

�

(0.024

)

�

�

(0.066

)

�

�

(0.011

)

Diluted losses per ADS

�

�

(0.047

)

�

�

(0.132

)

�

�

(0.022

)

�

�

�

�

�

�

�

�

�

�

�

�

�

Net loss

�

�

(4,657

)

�

�

(13,121

)

�

�

(2,137

)

�

�

�

�

�

�

�

�

�

�

�

�

�

Other comprehensive loss, net of tax:

�

�

�

�

�

�

�

�

�

�

�

�

Foreign currency translation adjustments

�

�

(84

)

�

�

(10

)

�

�

(2

)

Comprehensive loss

�

�

(4,741

)

�

�

(13,131

)

�

�

(2,139

)

�

�

China Nepstar Chain Drugstore Ltd.

Unaudited Condensed Consolidated Balance Sheets

(amounts in thousands)

�

�

�

As of

�

�

As of

�

�

As of

�

�

�

December 31,

�

�

September 30,

�

�

September 30,

�

�

�

2013

�

�

2014

�

�

2014

�

�

�

RMB

�

�

RMB

�

�

USD

�

�

�

�

�

�

�

�

�

�

�

ASSETS

�

�

�

�

�

�

�

�

�

�

�

�

Current assets

�

�

�

�

�

�

�

�

�

�

�

�

Cash and cash equivalents

�

�

361,146

�

�

�

183,469

�

�

�

29,891

�

Short-term bank time deposits

�

�

184,440

�

�

�

67,256

�

�

�

10,957

�

Restricted cash

�

�

37,000

�

�

�

37,555

�

�

�

6,118

�

Accounts receivable, net of allowance for doubtful accounts

�

�

131,984

�

�

�

119,621

�

�

�

19,489

�

Bills receivable

�

�

-

�

�

�

703

�

�

�

115

�

Amounts due from related parties

�

�

379

�

�

�

2,986

�

�

�

486

�

Prepaid expenses, deposits and other current assets

�

�

169,210

�

�

�

232,781

�

�

�

37,925

�

Inventories

�

�

551,783

�

�

�

592,706

�

�

�

96,563

�

Deferred tax assets

�

�

6,330

�

�

�

4,835

�

�

�

788

�

Total current assets

�

�

1,442,272

�

�

�

1,241,912

�

�

�

202,332

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Non-current assets

�

�

�

�

�

�

�

�

�

�

�

�

Long-term bank time deposits

�

�

40,256

�

�

�

-

�

�

�

-

�

Property and equipment, net

�

�

123,183

�

�

�

132,135

�

�

�

21,527

�

Rental deposits

�

�

41,946

�

�

�

43,174

�

�

�

7,034

�

Cost method investments

�

�

12,638

�

�

�

12,638

�

�

�

2,059

�

Intangible assets, net

�

�

2,509

�

�

�

2,509

�

�

�

409

�

Goodwill

�

�

51,819

�

�

�

51,819

�

�

�

8,442

�

Deferred tax assets

�

�

11,723

�

�

�

17,903

�

�

�

2,917

�

Accrued interest income

�

�

769

�

�

�

-

�

�

�

-

�

Total non-current assets

�

�

284,843

�

�

�

260,178

�

�

�

42,388

�

Total assets

�

�

1,727,115

�

�

�

1,502,090

�

�

�

244,720

�

�

�

�

�

�

�

�

�

�

�

�

�

�

LIABILITIES AND SHAREHOLDERS’ EQUITY

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Current liabilities

�

�

�

�

�

�

�

�

�

�

�

�

Accounts payable

�

�

403,558

�

�

�

433,078

�

�

�

70,557

�

Bills payable

�

�

4,334

�

�

�

1,734

�

�

�

283

�

Amounts due to related parties

�

�

29,247

�

�

�

24,196

�

�

�

3,942

�

Accrued expenses and other payables

�

�

123,065

�

�

�

121,100

�

�

�

19,730

�

Income tax payable

�

�

34,567

�

�

�

22,083

�

�

�

3,598

�

Dividend payable

�

�

191,246

�

�

�

-

�

�

�

-

�

Deferred income

�

�

22,477

�

�

�

34,222

�

�

�

5,575

�

Total current liabilities

�

�

808,494

�

�

�

636,413

�

�

�

103,685

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Non-current liabilities

�

�

�

�

�

�

�

�

�

�

�

�

Deferred income

�

�

17,391

�

�

�

15,746

�

�

�

2,565

�

Deferred tax liabilities

�

�

16,541

�

�

�

11,001

�

�

�

1,792

�

Other non-current liabilities

�

�

39,163

�

�

�

40,755

�

�

�

6,640

�

Total non-current liabilities

�

�

73,095

�

�

�

67,502

�

�

�

10,997

�

Total liabilities

�

�

881,589

�

�

�

703,915

�

�

�

114,682

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Shareholders’ equity

�

�

�

�

�

�

�

�

�

�

�

�

Share capital

�

�

158

�

�

�

158

�

�

�

26

�

Additional paid-in capital

�

�

640,341

�

�

�

640,341

�

�

�

104,324

�

Accumulated other comprehensive loss

�

�

(41,623

)

�

�

(41,769

)

�

�

(6,805

)

Retained earnings

�

�

246,650

�

�

�

199,445

�

�

�

32,493

�

Total shareholders’ equity

�

�

845,526

�

�

�

798,175

�

�

�

130,038

�

Total liabilities and shareholders' equity

�

�

1,727,115

�

�

�

1,502,090

�

�

�

244,720

�

�

�

Exhibit 99.2

�

China Nepstar Chain Drugstore Appoints Ms. Rebecca Yingnan Zhang as Chief Operating Officer

�

SHENZHEN, China,�November 26, 2014�—�China Nepstar Chain Drugstore Ltd.�(NYSE: NPD) ("Nepstar" or the "Company"), a leading retail drugstore chain in China based on the number of directly operated stores, today announced the appointment of Ms. Rebecca Yingnan Zhang as the Company's Chief Operating Officer, effective immediately.

�

Ms.Zhang has over 20 years of experience in the pharmaceutical industry and joined Nepstar in March 1999. Prior to Ms. Zhang’s appointment as the Company’s Chief Operating Officer, she served as executive vice president in charge of procurement, merchandising, logistics and quality departments starting from April 2014. She was the Company’s vice president of procurement and merchandising from January 2009 to April 2014. Prior to that Ms. Zhang served as head of procurement department. Ms. Zhang received a bachelor’s degree in microbiological pharmaceutical in 1991 from Shenyang Pharmaceutical University.

�

"As a seasoned veteran at Nepstar, Rebecca fully understands our business strategies, development plans, and operations. We believe her strong execution skill and close collaboration with the management team will help improve the Company's business performance. We look forward to Rebecca’s continued contribution to our growth and to maximize shareholder value," commented Mr. Fuxiang Zhang, the Company's chief executive officer.

�

About China Nepstar Chain Drugstore Ltd.

�

China Nepstar Chain Drugstore Ltd.�(NYSE: NPD) is a leading�retail drugstore chain in�China. As of�September 30, 2014, the Company had 2,048 directly operated stores across 77 cities, one headquarter distribution center and 16 regional distribution centers in�China. Nepstar provides its customers with high-quality, professional and convenient pharmaceutical products and services, in addition to a diverse selection of merchandises, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products. Nepstar's strategies of centralized procurement, competitive pricing, customer loyalty programs and private label offerings have enabled it to capitalize on the continuing economic growth in�China�and take advantage of the demographic trend in�China�to achieve a strong brand and leading market position. For further information, please visit�http://www.nepstar.cn.

�

�

Safe Harbor Statement

�

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's strategic operational plans and business outlook, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the�U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

�

For further information, please contact:

�

Zixin Shao

Chief Financial Officer

China Nepstar Chain Drugstore Ltd.

Tel: +86-755-2641-4065

Email: [email protected]

�

Mr. Dixon Chen

Investor Relations

Grayling

Tel: +1-646-284-9403

Email: [email protected]

�

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