Full Year 2010 Results
Total Net Revenues
Total revenues for the full year 2010 were $227.5 million, representing an increase of 28.1% from $177.7 million for the full year 2009. The increase in the Company's net revenues was primarily due to its online business growth.
Online PlatformNet revenues from the online platform were $178.8 million for the full year 2010, representing an increase of 38.2% from $129.4 million for the full year 2009. The growth in net revenues was contributed by the growth of the Internet business, partly offset by a drop in revenues from the call center business. Directly Operated Stores Net revenues from directly operated stores were $30.7 million for the full year 2010, representing a decrease of 17.9% from $37.4 million for the full year 2009. The decrease was primarily due to a decline in the number of directly operated stores in operation from an average of 157 stores in 2009 to an average of 151 stores in 2010. The Company converted 35 directly operated stores into franchised stores during 2010. Franchised Stores Net revenues from franchised stores were $18.1 million for the full year 2010, representing an increase of 65.1% from $10.9 million for the full year 2009. The growth in net revenues was primarily due to an increase in the number of franchised stores in operation from an average of 99 stores in 2009 to an average of 304 stores in 2010. Cost of Goods Sold 2 Cost of goods sold was $132.6 million for the full year 2010, an increase of 36.7% from $97.1 million for the full year 2009. The increase was primarily due to online business growth. Gross Profit 1 and Gross Margin Gross profit for the full year 2010 was $94.9 million, representing an increase of 17.7% from $80.6 million for the full year 2009. Gross margin was 41.7% for the full year 2010, compared to 45.4% for the full year 2009. The decrease in gross margin was primarily due to the combined effects of (i) increase in the weighting of the Internet business in total net revenues, (ii) an increase in net revenues from third-party branded products, for which the profit margin is lower than for the Company's own branded products; and (iii) the increased number of franchised stores in operation, where the Company offered a higher average discount rate to its franchisees.
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