Stage Stores’ Third Quarter Results Improve 22%; Company Raises 2012 Guidance

(Tables to Follow)

Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
		Thirteen Weeks Ended
		October 27, 2012							October 29, 2011
		Amount				% to Sales (1)			Amount				% to Sales (1)
Net sales		$	370,583			100.0	%		$	333,508			100.0	%
Cost of sales and related buying, occupancy and distribution expenses			290,719			78.4	%			262,345			78.7	%
Gross profit			79,864			21.6	%			71,163			21.3	%
Selling, general and administrative expenses			92,472			25.0	%			86,994			26.1	%
Store opening costs			1,629			0.4	%			1,578			0.5	%
Interest expense, net of income of $0 and $0, respectively			568			0.2	%			1,015			0.3	%
Income before income tax			(14,805	)		-4.0	%			(18,424	)		-5.5	%
Income tax benefit			(5,947	)		-1.6	%			(7,118	)		-2.1	%
Net loss		$	(8,858	)		-2.4	%		$	(11,306	)		-3.4	%
Basic and diluted earnings per share data:
Basic earnings per share		$	(0.28	)					$	(0.36	)
Basic weighted average shares outstanding			31,558							31,139
Diluted earnings per share		$	(0.28	)					$	(0.36	)
Diluted weighted average shares outstanding			31,558							31,139
(1) Percentages may not foot due to rounding.

Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except earnings per share)
(Unaudited)
		Thirty-Nine Weeks Ended
		October 27, 2012						October 29, 2011
		Amount			% to Sales (1)			Amount				% to Sales (1)
Net sales		$	1,117,901		100.0	%		$	1,032,823			100.0	%
Cost of sales and related buying, occupancy and distribution expenses			829,024		74.2	%			772,583			74.8	%
Gross profit			288,877		25.8	%			260,240			25.2	%
Selling, general and administrative expenses			279,959		25.0	%			256,671			24.9	%
Store opening costs			3,157		0.3	%			5,218			0.5	%
Interest expense, net of income of $0 and $24, respectively			2,350		0.2	%			2,806			0.3	%
Income before income tax			3,411		0.3	%			(4,455	)		-0.4	%
Income tax expense			1,025		0.1	%			(2,701	)		-0.3	%
Net income (loss)		$	2,386		0.2	%		$	(1,754	)		-0.2	%
Basic and diluted earnings per share data:
Basic earnings per share		$	0.08					$	(0.05	)
Basic weighted average shares outstanding			31,035						33,885
Diluted earnings per share		$	0.08					$	(0.05	)
Diluted weighted average shares outstanding			31,301						33,885
(1) Percentages may not foot due to rounding.

Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
	October 27, 2012				January 28, 2012
ASSETS
Cash and cash equivalents	$	37,420			$	18,621
Merchandise inventories, net		510,815				347,944
Prepaid expenses and other current assets		20,893				33,434
Total current assets		569,128				399,999
Property, equipment and leasehold improvements, net		296,845				300,717
Intangible asset		14,910				14,910
Other non-current assets, net		21,538				19,713
Total assets	$	902,421			$	735,339
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	250,864			$	106,022
Current portion of debt obligations		727				13,782
Accrued expenses and other current liabilities		79,804				66,495
Total current liabilities		331,395				186,299
Long-term debt obligations		33,277				35,721
Other long-term liabilities		109,305				100,613
Total liabilities		473,977				322,633
Commitments and contingencies
Common stock, par value $0.01, 100,000 shares authorized, 31,851 and 30,444 shares issued, respectively
		319				304
Additional paid-in capital		371,417				349,366
Less treasury stock - at cost, 4 and 0 shares, respectively		(988	)			(835	)
Accumulated other comprehensive loss		(4,556	)			(4,748	)
Retained earnings		62,252				68,619
Total stockholders' equity		428,444				412,706
Total liabilities and stockholders' equity	$	902,421			$	735,339

Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
	Thirty-Nine Weeks Ended
	October 27, 2012				October 29, 2011
Cash flows from operating activities:
Net income (loss)	$	2,386			$	(1,754	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization, and impairment of long-lived assets		44,894				46,027
Loss on retirements of property and equipment		-				123
Deferred income taxes		(98	)			(28	)
Tax (deficiency) benefit from stock-based compensation		(1,391	)			774
Stock-based compensation expense		5,459				6,354
Amortization of debt issuance costs		353				251
Excess tax benefits from stock-based compensation		(851	)			(1,252	)
Deferred compensation obligation		92				114
Amortization of employee benefit related costs		310				118
Construction allowances from landlords		4,133				4,487
Changes in operating assets and liabilities:
Increase in merchandise inventories		(162,871	)			(122,136	)
Decrease (increase) in other assets		10,262				(1,786	)
Increase in accounts payable and other liabilities		157,379				83,093
Total adjustments		57,671				16,139
Net cash provided by operating activities		60,057				14,385
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements		(35,610	)			(33,166	)
Proceeds from retirements of property and equipment		-				122
Net cash used in investing activities		(35,610	)			(33,044	)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings		262,620				160,100
Payments of revolving credit facility borrowings		(259,620	)			(82,100	)
Payments of long-term debt obligations		(18,499	)			(10,043	)
Payments of debt issuance costs		-				(1,149	)
Repurchases of common stock		(583	)			(110,692	)
Proceeds from exercise of stock awards		18,336				7,139
Excess tax benefits from stock-based compensation		851				1,252
Cash dividends paid		(8,753	)			(8,256	)
Net cash used in financing activities		(5,648	)			(43,749	)
Net increase (decrease) in cash and cash equivalents		18,799				(62,408	)
Cash and cash equivalents:
Beginning of period		18,621				89,349
End of period	$	37,420			$	26,941

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