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Stage Stores Reports Record Second Quarter Earnings; 11% Increase In Adjusted EPS

Stocks in this article: SSI

Reported Earnings and One-Time Items

Including one-time items, the Company reported earnings for the second quarter of $9.6 million, or $0.29 per diluted share. One-time items, which total approximately $6.5 million, or $0.12 per share, are associated with the consolidation of the Company’s South Hill, Virginia operations into its Houston headquarters. Of the $6.5 million, $4.4 million is included in gross profit and $2.1 million is included in SG&A expenses. For the first six months of the fiscal year, the Company reported earnings of $2.8 million, or $0.08 per diluted share, this year compared to $11.2 million, or $0.36 per diluted share, last year. One-time items total approximately $16.2 million, or $0.31 per share, this year versus approximately $3.0 million, or $0.06 per share, last year.

FY 2013 Guidance

The Company revised its comparable store sales guidance range for the full year to an increase of 0.6% to 1.6%, which assumes comps of zero to 2.0% for the second half of the year. The Company also revised its adjusted EPS guidance range for the year, excluding one-time items, to $1.30 - $1.40 from $1.45 - $1.55 previously. The one-time items are associated with the consolidation of the Company’s South Hill operations into its Houston headquarters and are estimated to be approximately $21.7 million, or $0.41 per diluted share, for the year.

           

FY 2013 OUTLOOK

FY 2012

Sales ($mm) $1,672     -     $1,690 $1,646
Same Store sales +0.6% - +1.6% +5.7%
 
Adjusted EPS $1.30 - $1.40 $1.33
 
Diluted Shares (m) 33,600 31,600
 

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 703-639-1414. 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 30, 2013.

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, Stage and Steele’s names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company currently operates 872 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 comparable store sales outlook for the second half of the fiscal year. Forward-looking statements also include comments regarding the Company’s sales, comparable store sales, adjusted EPS and diluted share count outlooks for the 2013 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 3, 2013, 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.

 
Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
               
Thirteen Weeks Ended
August 3, 2013 July 28, 2012
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 395,331 100.0 % $ 381,624 100.0 %
 
Cost of sales and related buying, occupancy and distribution expenses   279,862 70.8 %   266,450 69.8 %
Gross profit 115,469 29.2 % 115,174 30.2 %
Selling, general and administrative expenses 99,323 25.1 % 94,747 24.8 %
Store opening costs 122 % 583 0.2 %
Interest expense   708 0.2 %   951 0.2 %
Income before income tax 15,316 3.9 % 18,893 5.0 %
Income tax expense   5,709 1.4 %   7,231 1.9 %
Net income $ 9,607 2.4 % $ 11,662 3.1 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ 0.29 $ 0.37
Basic weighted average shares outstanding   32,762   31,010
 
Diluted earnings per share $ 0.29 $ 0.37
Diluted weighted average shares outstanding   33,073   31,225
 
 
(1) Percentages may not foot due to rounding.
 
 
Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(Unaudited)
               
Twenty-Six Weeks Ended
August 3, 2013 July 28, 2012
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 773,968 100.0 % $ 747,318 100.0 %
 
Cost of sales and related buying, occupancy and distribution expenses   568,283 73.4 %   538,305 72.0 %
Gross profit 205,685 26.6 % 209,013 28.0 %
Selling, general and administrative expenses 198,927 25.7 % 187,487 25.1 %
Store opening costs 1,094 0.1 % 1,528 0.2 %
Interest expense   1,294 0.2 %   1,782 0.2 %
Income before income tax 4,370 0.6 % 18,216 2.4 %
Income tax expense   1,619 0.2 %   6,972 0.9 %
Net income $ 2,751 0.4 % $ 11,244 1.5 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ 0.08 $ 0.36
Basic weighted average shares outstanding   32,534   30,773
 
Diluted earnings per share $ 0.08 $ 0.36
Diluted weighted average shares outstanding   32,908   30,988
 
 
(1) Percentages may not foot due to rounding.
 
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
       
August 3, 2013 February 2, 2013
 

ASSETS

Cash and cash equivalents $ 34,146 $ 17,937
Merchandise inventories, net 442,250 413,928
Prepaid expenses and other current assets   43,743     35,467  
Total current assets 520,139 467,332
 
Property, equipment and leasehold improvements, net 289,769 290,701
Intangible asset 14,910 14,910
Other non-current assets, net   25,399     21,928  
Total assets $ 850,217   $ 794,871  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 142,825 $ 110,826
Accrued expenses and other current liabilities   66,672     97,246  
Total current liabilities 209,497 208,072
 
Long-term debt obligations 56,240 11,585
Other long-term liabilities   110,290     110,344  
Total liabilities   376,027     330,001  
 
Commitments and contingencies - -
 
Common stock, par value $0.01, 100,000 shares authorized,
32,809 and 32,014 shares issued, respectively 328 320
Additional paid-in capital 390,589 376,615
Less treasury stock - at cost, 0 and 0 shares, respectively (898 ) (701 )
Accumulated other comprehensive loss (5,946 ) (6,135 )
Retained earnings   90,117     94,771  
Total stockholders' equity   474,190     464,870  
Total liabilities and stockholders' equity $ 850,217   $ 794,871  
 
 
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
       
Twenty-Six Weeks Ended
August 3, 2013 July 28, 2012
Cash flows from operating activities:
Net income $ 2,751 $ 11,244
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation, amortization, and impairment of long-lived assets 30,664 30,262
Loss on retirements of property and equipment 261 -
Deferred income taxes 70 449
Tax benefit (deficiency) from stock-based compensation 1,779 (893 )
Stock-based compensation expense 4,025 3,436
Amortization of debt issuance costs 129 288
Excess tax benefits from stock-based compensation (1,998 ) (550 )
Deferred compensation obligation 197 54
Amortization of employee benefit related costs 305 206
Construction allowances from landlords 1,418 1,377
Changes in operating assets and liabilities:
Increase in merchandise inventories (28,322 ) (48,601 )
(Increase) decrease in other assets (11,889 ) 4,414
(Decrease) increase in accounts payable and other liabilities   (344 )   24,716  
Total adjustments   (3,705 )   15,158  
Net cash (used in) provided by operating activities   (954 )   26,402  
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (29,937 ) (22,621 )
Proceeds from disposal of assets   11     -  
Net cash used in investing activities   (29,926 )   (22,621 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings 214,725 190,405
Payments of revolving credit facility borrowings (169,650 ) (174,175 )
Payments of long-term debt obligations (363 ) (18,327 )
Repurchases of common stock - (61 )
Payments for stock related compensation (2,165 ) (455 )
Proceeds from exercise of stock awards 9,949 7,846
Excess tax benefits from stock-based compensation 1,998 550
Cash dividends paid   (7,405 )   (5,558 )
Net cash provided by financing activities   47,089     225  
Net increase in cash and cash equivalents 16,209 4,006
 
Cash and cash equivalents:
Beginning of period   17,937     18,621  
End of period $ 34,146   $ 22,627  
 
 
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
               
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 3, 2013 July 28, 2012 August 3, 2013 July 28, 2012
 
Net income:
On a U.S. GAAP basis $ 9,607 $ 11,662 $ 2,751 $ 11,244

South Hill consolidation related charges, net of tax of $2,367 and $5,983, respectively

4,104 - 10,166 -

Former Chief Executive Officer resignation related charges, net of tax of $1,148

  -   -   -   1,852
On a non-U.S. GAAP basis $ 13,711 $ 11,662 $ 12,917 $ 13,096
 
Diluted earnings per share:
On a U.S. GAAP basis $ 0.29 $ 0.37 $ 0.08 $ 0.36
South Hill consolidation related charges 0.12 - 0.31 -
Former Chief Executive Officer resignation related charges   -   -   -   0.06
On a non-U.S. GAAP basis $ 0.41 $ 0.37 $ 0.39 $ 0.42




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