VLOV Inc. (VLOV.OB) Announces FY 2010 Guidance Lifted by Enhanced Designs and Brand Awareness

In the company’s news yesterday,

VLOV Inc. posted financial guidance for the fiscal 12 months ending December 31, 2010, announcing that it expects double-digit growth for the year.

The company anticipates 2010 net sales to be in the range of $71 million to $75 million, a 10.4 percent to 16.6 percent increase compared to $64.3 million in 2009.

Gross profit for 2010 is expected to be between $25.9 million and $27.8 million, reflecting an anticipated gross margin of 36.5 percent to 37.0 percent compared to 36.2 percent in 2009. The company attributes these expectations to its productive outsourcing strategy, as well as higher average selling prices.

Operating income from operations in 2010 is expected to be from $17.7 million to $18.9 million, reflecting an anticipated operating margin of 24.9 percent to 25.2 percent compared to $13.6 million and 21.1 percent in 2009.

VLOV CEO and Chairman Qingqing Wu said the company expects improvement and strength based on the success of all its product categories, and noted positive feedback from a recent showcasing of its latest designs.

“Our anticipated double-digit growth in sales and adjusted earnings is being driven by strong consumer demand across all of our VLOV product lines, including vo.vo, V9, VLOV Crossover and our higher end Richard Wu line. We are also experiencing growth across all of our product categories, including apparel and higher margin footwear and accessories. Additionally, our ability to elevate VLOV’s design aesthetic and raise our brand profile – including higher price points — is expected to drive sales increases and gross margin expansion throughout 2010,” Wu stated in the press release. “We recently held our Spring 2010 Sales Fair for our distributors to showcase our new designs. The positive response from our distributors to these new designs resulted in strong initial orders for the fall season and highlights the importance these events play in our annual operating results.”

VLOV’s distributors utilize free-standing stores, shop-in-shops, counters and concessions. The company is revamping its VLOV lifestyle brand to reflect a more stylish, chic and upscale image; in accordance, the company said it plans to target primarily free-standing stores over the next two years, which will allow for more brand exposure.

“Another key component of our growth strategy is the continued execution of targeted advertising and marketing programs designed to generate increased brand awareness and create strong demand for VLOV products. In 2010, we plan to spend 8 percent to 10 percent of total sales on advertising and marketing, which is up from 5 percent of sales in 2009. Our target demographic – the 15 to 34 year old, middle-upper income male Chinese consumer – is fashion-forward, brand-conscious and has significant disposable income to allocate to his wardrobe. We’re providing him with chic, stylish, head-to-toe outfitting and a compelling shopping environment that reflects the contemporary, sophisticated image of our brand,” Wu stated.

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Forward-Looking Statement:

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.