News Column

Stage Stores Reports Second Quarter Results

August 21, 2014

HOUSTON--(BUSINESS WIRE)-- Stage Stores, Inc. (NYSE: SSI) today reported financial results for the second quarter ended August 2, 2014.

Total sales were $377 million. Comparable store sales decreased 4.2%. The Company reported net income of $11.2 million, or $0.35 per diluted share, versus EPS of $0.29 for the second quarter of the prior year period. On an adjusted basis, EPS from continuing operations in the 2013 second quarter was $0.45.

Michael Glazer, President and Chief Executive Officer, stated, “We found the second quarter to be challenging, but we were encouraged that our sales trend improved towards the end of the quarter. We were pleased with the performance of our back-to-school categories as well as cosmetics, which delivered another strong quarterly performance. We managed our merchandise margins and inventory well and feel good about forward looking inventory levels and content. We expect improved second half results given our sales driving initiatives.”

Reported Results

The Company reported earnings of $11.2 million, or $0.35 per diluted share, for the second quarter. For the prior year’s second quarter, including discontinued operations and one-time items, the Company reported earnings of $9.6 million, or $0.29 per diluted share. The prior year’s quarterly earnings include results from the Steele’s division, which was sold on March 7, 2014.

For the first six months of the fiscal year, comparable store sales decreased 2.2%. The net loss for the first half of 2014, including discontinued operations, was $7.6 million, or $0.24 per share, compared to net income of $2.8 million, or $0.08 per diluted share, in the comparable prior year period.

Revised Full Year 2014 Guidance

Comparable store sales for the second half of the year are now expected to be in the range of flat to positive 2.0%. EPS guidance for the full year from continuing operations is now expected to be in the range of $1.05 - $1.15.

         
FY 2014 OUTLOOK*FY 2013*
Sales ($mm) $1,610 - $1,625$1,610
 
EPS $1.05 - $1.15$1.22**
 
Diluted Shares (m) 32,240 32,765
 

*From continuing operations.

**Adjusted to exclude one-time items.

 

Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its second quarter results. Interested parties can participate in the Company’s conference call by dialing 703-639-1358. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestoresinc.com and then clicking on Investor Relations, then Webcasts and then the webcast link. A replay of the conference call will be available online until midnight on Friday, August 29, 2014.

About Stage Stores

Stage Stores, Inc. operates primarily in small and mid-sized towns and communities. Its stores, which operate under the Bealls, Goody’s, Palais Royal, Peebles and Stage names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company currently operates 849 stores in 40 states. The Company also has an eCommerce website. For more information about Stage Stores, visit the Company’s web site at www.stagestoresinc.com.

Caution Concerning Forward-Looking Statements

This document contains “forward-looking statements”. Forward-looking statements reflect our expectations regarding future events and operating performance and often contain words such as "believe", "expect", "may", "will", "should", "could", "anticipate", "plan" or similar words. In this document, forward-looking statements include comments regarding the Company’s sales, EPS and diluted share count outlooks for the 2014 fiscal year. Forward-looking statements also include comments regarding the Company’s outlook for comparable store sales for the second half of the 2014 fiscal year. Forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC") on April 2, 2014, and other factors as may periodically be described in our other filings with the SEC. Forward-looking statements speak only as of the date of this document. We do not undertake to update our forward-looking statements.

(Tables to Follow)

           
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except earnings per share data)
(Unaudited)
 
Thirteen Weeks Ended
August 2, 2014August 3, 2013
Amount % to Sales (1)   Amount

% to Sales (1)

 
Net sales $ 377,446 100.0 % $ 389,991 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   265,106 70.2 %   274,416   70.4 %
Gross profit 112,340 29.8 % 115,575 29.6 %
Selling, general and administrative expenses 93,108 24.7 % 97,489 25.0 %
Store opening costs 224 0.1 % 122 0.0 %
Interest expense   755 0.2 %   708   0.2 %
Income from continuing operations before income tax 18,253 4.8 % 17,256 4.4 %
Income tax expense   7,061 1.9 %   6,424   1.6 %
Income from continuing operations 11,192 3.0 % 10,832 2.8 %
Loss from discontinued operations, net of tax benefit of $0 and $715, respectively   - 0.0 %   (1,225 ) -0.3 %
Net income $ 11,192 3.0 % $ 9,607   2.5 %
 
Basic earnings (loss) per share data:
Continuing operations $ 0.35 $ 0.33
Discontinued operations   -   (0.04 )
Basic earnings per share $ 0.35 $ 0.29  
Basic weighted average shares outstanding   31,757   32,762  
 
Diluted earnings (loss) per share data:
Continuing operations $ 0.35 $ 0.33
Discontinued operations   -   (0.04 )
Diluted earnings per share $ 0.35 $ 0.29  
Diluted weighted average shares outstanding   31,825   33,073  
 
(1) Percentages may not foot due to rounding.
           
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except earnings per share data)
(Unaudited)
 
Twenty-Six Weeks Ended
August 2, 2014August 3, 2013
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 749,486 100.0 % $ 762,094 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   559,205   74.6 %   556,890   73.1 %
Gross profit 190,281 25.4 % 205,204 26.9 %
Selling, general and administrative expenses 189,162 25.2 % 195,436 25.6 %
Store opening costs 1,032 0.1 % 1,097 0.1 %
Interest expense   1,479   0.2 %   1,294   0.2 %
Income (loss) from continuing operations before income tax (1,392 ) -0.2 % 7,377 1.0 %
Income tax expense (benefit)   (538 ) -0.1 %   2,733   0.4 %
Income (loss) from continuing operations (854 ) -0.1 % 4,644 0.6 %
Loss from discontinued operations, net of tax benefit of $4,257 and $1,114, respectively   (6,748 ) -0.9 %   (1,893 ) -0.2 %
Net income (loss) $ (7,602 ) -1.0 % $ 2,751   0.4 %
 
Basic earnings (loss) per share data:
Continuing operations $ (0.03 ) $ 0.14
Discontinued operations   (0.21 )   (0.06 )
Basic earnings (loss) per share $ (0.24 ) $ 0.08  
Basic weighted average shares outstanding   31,624     32,534  
 
Diluted earnings (loss) per share data:
Continuing operations $ (0.03 ) $ 0.14
Discontinued operations   (0.21 )   (0.06 )
Diluted earnings per share $ (0.24 ) $ 0.08  
Diluted weighted average shares outstanding   31,624     32,908  
 
(1) Percentages may not foot due to rounding.
       
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
 
August 2, 2014February 1, 2014
 

ASSETS

 

Cash and cash equivalents $ 26,094 $ 14,762
Merchandise inventories, net 451,465 434,407
Prepaid expenses and other current assets   48,368     40,082  
Total current assets 525,927 489,251
 
Property, equipment and leasehold improvements, net 280,903 282,534
Intangible asset 14,910 14,910
Other non-current assets, net   24,112     24,142  
Total assets $ 845,852   $ 810,837  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 125,480 $ 125,707
Accrued expenses and other current liabilities   69,796     69,549  
Total current liabilities 195,276 195,256
 
Long-term debt obligations 107,415 60,871
Other long-term liabilities   96,666     100,266  
Total liabilities   399,357     356,393  
 
Commitments and contingencies - -
 
Common stock, par value $0.01, 100,000 shares authorized,
31,789 and 31,222 shares issued, respectively 318 312
Additional paid-in capital 391,678 384,295
Less treasury stock - at cost, 0 and 0 shares, respectively (855 ) (967 )
Accumulated other comprehensive loss (4,493 ) (4,616 )
Retained earnings   59,847     75,420  
Total stockholders' equity   446,495     454,444  
Total liabilities and stockholders' equity $ 845,852   $ 810,837  
       
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Twenty-Six Weeks Ended
August 2, 2014August 3, 2013
Cash flows from operating activities:
Net income (loss) $ (7,602 ) $ 2,751
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation, amortization and impairment of long-lived assets 31,261 30,664
Loss on retirements of property, equipment and leasehold improvements 655 261
Deferred income taxes (262 ) 70
Tax benefit from stock-based compensation 126 1,779
Stock-based compensation expense 4,436 4,025
Amortization of debt issuance costs 150 129
Excess tax benefits from stock-based compensation (826 ) (1,998 )
Deferred compensation obligation (112 ) 197
Amortization of employee benefit related costs 199 305
Construction allowances from landlords 2,756 1,418
Changes in operating assets and liabilities:
Increase in merchandise inventories (17,058 ) (28,322 )
Increase in other assets (8,416 ) (11,764 )
Decrease in accounts payable and other liabilities   (7,396 )   (344 )
Total adjustments   5,513     (3,580 )
Net cash used in operating activities   (2,089 )   (829 )
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (30,286 ) (29,937 )
Proceeds from disposal of assets   1,448     11  
Net cash used in investing activities   (28,838 )   (29,926 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings 227,365 214,725
Payments of revolving credit facility borrowings (179,600 ) (169,650 )
Payments of long-term debt obligations (1,412 ) (363 )
Payments of debt issuance costs - (125 )
Payments for stock related compensation (1,989 ) (2,165 )
Proceeds from exercise of stock awards 5,040 9,949
Excess tax benefits from stock-based compensation 826 1,998
Cash dividends paid   (7,971 )   (7,405 )
Net cash provided by financing activities   42,259     46,964  
Net increase in cash and cash equivalents 11,332 16,209
 
Cash and cash equivalents:
Beginning of period   14,762     17,937  
End of period $ 26,094   $ 34,146  
           
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
 
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 2, 2014August 3, 2013August 2, 2014August 3, 2013
 
Net income (loss):
On a U.S. GAAP basis $ 11,192 $ 9,607 $ (7,602 ) $ 2,751
Loss from discontinued operations   -   1,225   6,748     1,893
Income (loss) from continuing operations 11,192

 

10,832

 

(854 )

 

4,644
South Hill Consolidation related charges, net of tax of $2,367 and 5,983, respectively   -   4,104   -     10,166
On a non-U.S. GAAP basis $ 11,192 $ 14,936 $ (854 ) $ 14,810
 
Diluted earnings (loss) per share:
On a U.S. GAAP basis $ 0.35 $ 0.29 $ (0.24 ) $ 0.08
Loss from discontinued operations   -   0.04   0.21     0.06
Income (loss) from continuing operations 0.35

 

0.33

 

(0.03 )

 

0.14
South Hill Consolidation related charges   -   0.12   -  

 

  0.31
On a non-U.S. GAAP basis $ 0.35 $ 0.45 $ (0.03 ) $ 0.45





Stage Stores, Inc.

Bob Aronson, 800-579-2302

Vice President, Investor Relations

baronson@stagestores.com

Source: Stage Stores, Inc.


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