Stage Stores Reports Record Second Quarter Earnings; EPS Grows 28%; Company Raises 2012 Guidance

Stage Stores, Inc. (NYSE: SSI) today reported net income for the second quarter ended July 28, 2012 of $11.7 million, or $0.37 per diluted share. This compares to earnings of $0.29 per diluted share last year.

Diluted earnings per share for the first six months of the fiscal year, which include one-time charges of approximately $0.06 per share recorded in the first quarter associated with the resignation of the Company’s former Chief Executive Officer, were $0.36 compared to $0.27 in the same period last year. Excluding the one-time charges, diluted earnings per share increased 56% to $0.42.

As previously reported by the Company, sales for the second quarter were $382 million as compared to sales of $353 million last year. Comparable store sales for the second quarter increased 5.4%. For the first six months of the fiscal year, the Company reported total sales of $747 million and a comparable store sales increase of 4.0%.

Michael Glazer, President and Chief Executive Officer, commented, “We are very pleased with our second quarter results. Driven by our 5.4% same store sales increase and improvements in merchandise margins, EPS increased 28%. Strong full-price sales and lower markdowns resulted in higher average prices, and benefited both sales and merchandise margins in the quarter.”

Mr. Glazer concluded, “Heading into the back half of the year, we are encouraged by the momentum behind the business and the initiatives underway to bring even more excitement and appeal to our merchandise, stores and marketing. We are also very pleased with our new Private Label Credit Card Plan Agreement, which we executed last week and which extends our partnership with Alliance Data for another nine years. We look forward to collaborating with them to enhance our private label credit card program, strengthen the relationship with our customers and profitably grow sales.”

Updated Full Year 2012 Guidance

Based on its performance for the first half of the year, the Company raised its comparable store sales and EPS guidance ranges for the full year. The Company expects that comparable store sales for the year will be in a range of 2.5% to 3.5%. EPS, excluding the $0.06 one-time charge, is projected to be between $1.15 and $1.25 versus $1.08 to $1.20 previously. The Company noted that, compared to last year’s EPS of $0.92, the current outlook represents a year-over-year increase of 25% to 36%.
                   
 
FY 2012 OUTLOOK FY 2011
Sales ($mm) $ 1,605       -       $ 1,620 $ 1,512
 
Diluted EPS $ 1.15 - $ 1.25 $ 0.92
 
Diluted Shares (m) 31,685 33,278
 
 

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 703-639-1307. 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 31, 2012.

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 operates 834 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 expectations for sales, comparable store sales, EPS and diluted share count for the 2012 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 March 28, 2012, 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 Income
(in thousands, except per share data)
(Unaudited)
                                       
Thirteen Weeks Ended
July 28, 2012 July 30, 2011
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 381,624 100.0 % $ 352,832 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   266,450 69.8 %   248,975 70.6 %
Gross profit 115,174 30.2 % 103,857 29.4 %
Selling, general and administrative expenses 94,747 24.8 % 86,075 24.4 %
Store opening costs 583 0.2 % 906 0.3 %
Interest expense, net of income of $0 and $2, respectively   951 0.2 %   885 0.3 %
Income before income tax 18,893 5.0 % 15,991 4.5 %
Income tax expense   7,231 1.9 %   5,978 1.7 %
Net income $ 11,662 3.1 % $ 10,013 2.8 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ 0.37 $ 0.29
Basic weighted average shares outstanding   31,010   34,236
 
Diluted earnings per share $ 0.37 $ 0.29
Diluted weighted average shares outstanding   31,225   34,635
 
 
 
(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
July 28, 2012 July 30, 2011
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 747,318 100.0 % $ 699,315 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   538,305 72.0 %   510,238 73.0 %
Gross profit 209,013 28.0 % 189,077 27.0 %
Selling, general and administrative expenses 187,487 25.1 % 169,677 24.3 %
Store opening costs 1,528 0.2 % 3,640 0.5 %
Interest expense, net of income of $0 and $24, respectively   1,782 0.2 %   1,791 0.3 %
Income before income tax 18,216 2.4 % 13,969 2.0 %
Income tax expense   6,972 0.9 %   4,417 0.6 %
Net income $ 11,244 1.5 % $ 9,552 1.4 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ 0.36 $ 0.27
Basic weighted average shares outstanding   30,773   35,258
 
Diluted earnings per share $ 0.36 $ 0.27
Diluted weighted average shares outstanding   30,988   35,725
 
 
 
(1) Percentages may not foot due to rounding.
 
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
                   
July 28, 2012 January 28, 2012
 

ASSETS
Cash and cash equivalents $ 22,627 $ 18,621
Merchandise inventories, net 396,545 347,944
Prepaid expenses and other current assets   27,425     33,434  
Total current assets 446,597 399,999
 
Property, equipment and leasehold improvements, net 292,816 300,717
Intangible asset 14,910 14,910
Other non-current assets, net   20,954     19,713  
Total assets $ 775,277   $ 735,339  
 

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 129,936 $ 106,022
Current portion of debt obligations 710 13,782
Accrued expenses and other current liabilities   72,318     66,495  
Total current liabilities 202,964 186,299
 
Long-term debt obligations 46,696 35,721
Other long-term liabilities   97,170     100,613  
Total liabilities   346,830     322,633  
 
Commitments and contingencies
 
Common stock, par value $0.01, 100,000 shares authorized,
31,230 and 30,444 shares issued, respectively 312 304
Additional paid-in capital 359,400 349,366
Less treasury stock - at cost, 4 and 0 shares, respectively (950 ) (835 )
Accumulated other comprehensive loss (4,620 ) (4,748 )
Retained earnings   74,305     68,619  
Total stockholders' equity   428,447     412,706  
Total liabilities and stockholders' equity $ 775,277   $ 735,339  
 
 
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                   
Twenty-Six Weeks Ended
July 28, 2012 July 30, 2011
Cash flows from operating activities:
Net income $ 11,244 $ 9,552
 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization, and impairment of long-lived assets 30,262 30,853
Loss on retirements of property and equipment - 136
Deferred income taxes 449 79
Tax (deficiency) benefit from stock-based compensation (893 ) 749
Stock-based compensation expense 3,436 4,079
Amortization of debt issuance costs 288 155
Excess tax benefits from stock-based compensation (550 ) (1,181 )
Deferred compensation obligation 54 89
Amortization of employee benefit related costs 206 79
Construction allowances from landlords 1,377 2,102
Changes in operating assets and liabilities:
Increase in merchandise inventories (48,601 ) (32,124 )
Decrease in other assets 4,414 420
Increase (decrease) in accounts payable and other liabilities   24,716     (1,402 )
Total adjustments   15,158     4,034  
Net cash provided by operating activities   26,402     13,586  
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (22,621 ) (22,103 )
Proceeds from retirements of property and equipment   -     93  
Net cash used in investing activities   (22,621 )   (22,010 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings 190,405 51,700
Payments of revolving credit facility borrowings (174,175 ) (23,700 )
Payments of long-term debt obligations (18,327 ) (6,647 )
Payments of debt issuance costs - (1,097 )
Repurchases of common stock (516 ) (74,558 )
Proceeds from exercise of stock awards 7,846 6,956
Excess tax benefits from stock-based compensation 550 1,181
Cash dividends paid   (5,558 )   (5,408 )
Net cash used in financing activities   225     (51,573 )
Net increase (decrease) in cash and cash equivalents 4,006 (59,997 )
 
Cash and cash equivalents:
Beginning of period   18,621     89,349  
End of period $ 22,627   $ 29,352  
 

Copyright Business Wire 2010

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