Little Sheep will raise the selling price

Lu Wenbing, Executive Director and Chief Executive Officer of Little Sheep, said that the profit of entire group fell 2.7% to 38.1 million Yuan in the first half of 2010 due to inflation, the rising of raw material costs, and the closure and transform of some shops. In order to reduce these negative impacts, the company plans to raise 6% of the price which single customer should pay in store of Little Sheep in the second half of this year.

However, this measure still can not fully digest the impact of the rising costs. The company will take use of other various means to control costs. Lu believes that the earnings of the company will be improved in the second half of this year. He also said that the current procurement price of lamb has risen by 10-15%.

Wang Daizong, Executive Director and Chief Financial Officer of the company said that the capital expenditure of Little Sheep in this year is about 210 million Yuan. And it has invested 92 million Yuan in the first half of this year, mainly used for the addition of 18 new stores. In the second half of this year Little Sheep will continue to expand and revamp its stores in the first and second-tier cities in China.

It is expected that the number of newly opened stores in the second half of this year will also be 18. As of June 30, 2010 the total number of Little Sheep s self-operated restaurants is 170, and it also has 301 franchise restaurants. In the first half of this year the total revenue of the company reached 625 million Yuan, an increase of 21%.

Same-store sales and customer traffic increased by 6.9% and 9.8% respectively in the fist half of this year.