Stage Stores Reports Third Quarter Results

Stage Stores, Inc. (NYSE: SSI) today reported financial results for the third fiscal quarter ended November 2, 2013.

Total sales for the quarter decreased 2.8% to $360 million from $371 million in the prior year quarter ended October 27, 2012. Comparable store sales decreased 4.6%. The Company noted that cosmetics, accessories and footwear were its best performing categories during the quarter. Geographically, the South Central and Northeast regions performed better than the Company average.

The Company reported an adjusted net loss for the third quarter, excluding one-time items, of $0.26 per share. This compares to an adjusted net loss of $0.25 per share last year.

“We were pleased with our strong gross profit rate for the quarter, which resulted in an adjusted net loss per share that was in-line with last year,” said Michael Glazer, President and Chief Executive Officer. “Our comparable store sales improved sequentially each month during the quarter, but significantly lower clearance sales versus last year led to an overall comp decline. Excluding clearance sales from both years, our comparable store sales were positive for the quarter.

“With regard to the consolidation, the merchandise assortments in our former South Hill division stores are now essentially aligned with the rest of the chain. As a result, the comparable store sales gap that we saw in the second quarter between these stores and our Houston division stores closed materially during the third quarter.”

Mr. Glazer continued, “As part of our ongoing efforts to become more productive and improve our profitability, we implemented an expense reduction program in early November. These cost cutting measures, which included the elimination of approximately 50 corporate positions, are estimated to save $5 million annually.

“Looking ahead, we have strong marketing campaigns and in-store initiatives planned for the fourth quarter, including holiday offers that are even more exciting and compelling than last year. Our stores will be open on Thanksgiving night from 6:00 p.m. to 1:00 a.m. for our biggest ever Thanksgiving event, and will then reopen at 6:00 a.m. on Black Friday with continued door busters, deals and prizes.

“While we feel good about our holiday plans, given the current challenging sales environment for apparel retailers, we are projecting comparable store sales for the fourth quarter to be in a range of down 2% to flat. We are also projecting adjusted earnings for the year of between $1.20 and $1.30 per diluted share,” Mr. Glazer concluded.

Reported Earnings

Including one-time items, the Company reported a net loss for the third quarter of $11.0 million, or $0.34 per share, this year compared to a net loss of $8.9 million, or $0.28 per share, last year. One-time items recorded in this year’s third quarter, which total approximately $4.4 million, or $0.08 per share, are associated with the consolidation of the Company’s South Hill, Virginia operations into its Houston headquarters. One-time items recorded in last year’s third quarter, which total approximately $1.4 million, or $0.03 per share, are also associated with the South Hill consolidation. For the first three quarters of the fiscal year, the Company reported a net loss of $8.2 million, or $0.25 per share, this year compared to earnings of $2.4 million, or $0.08 per diluted share, last year. One-time items total approximately $20.5 million, or $0.39 per share, this year versus approximately $4.4 million, or $0.09 per share, last year.

FY 2013 Guidance

The Company revised its comparable store sales guidance range for the full year to (1.1)% - (0.5)%, which assumes comps of between (2.0)% and flat for the fourth quarter. The Company also revised its adjusted EPS guidance range for the year, excluding one-time items, to $1.20 - $1.30 from $1.30 - $1.40 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 $22.3 million, or $0.43 per diluted share, for the year.
      FY 2013 OUTLOOK       FY 2012
Sales ($mm)

Same Store sales
$1,643

(1.1)%
-

-
$1,653

(0.5)%
$1,646

+5.7%
 
Adjusted EPS $1.20 - $1.30 $1.33
 
Diluted Shares (m) 32,760 31,600

Store Activity

The Company reported that it opened 12 new traditional stores during the third quarter, which consisted of 7 Goody’s and 5 Peebles branded stores. On November 14 th, the Company opened an additional 6 traditional stores (2 Bealls, 3 Goody’s and 1 Peebles) and 1 Steele’s off-price store. These 19 new store openings, which brought the total number of stores opened during the year to 29, completed the Company’s 2013 store opening program.

Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its third quarter results. Interested parties can participate in the Company’s conference call by dialing 703-639-1118. 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, November 29, 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 889 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 fiscal 2013 fourth quarter. 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 Operations
(in thousands, except per share data)
(Unaudited)
       
Thirteen Weeks Ended
November 2, 2013 October 27, 2012
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 360,177 100.0 % $ 370,583 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   277,085   76.9 %   290,719   78.4 %
Gross profit 83,092 23.1 % 79,864 21.6 %
Selling, general and administrative expenses 98,636 27.4 % 92,472 25.0 %
Store opening costs 1,379 0.4 % 1,629 0.4 %
Interest expense   718   0.2 %   568   0.2 %
Loss before income tax (17,641 ) -4.9 % (14,805 ) -4.0 %
Income tax benefit   (6,670 ) -1.9 %   (5,947 ) -1.6 %
Net loss $ (10,971 ) -3.0 % $ (8,858 ) -2.4 %
 
Basic and diluted loss per share data:
Basic loss per share $ (0.34 ) $ (0.28 )
Basic weighted average shares outstanding   31,854     31,558  
 
Diluted loss per share $ (0.34 ) $ (0.28 )
Diluted weighted average shares outstanding   31,854     31,558  
 
 
 
(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
November 2, 2013 October 27, 2012
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 1,134,145 100.0 % $ 1,117,901 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   845,368   74.5 %   829,024 74.2 %
Gross profit 288,777 25.5 % 288,877 25.8 %
Selling, general and administrative expenses 297,563 26.2 % 279,959 25.0 %
Store opening costs 2,473 0.2 % 3,157 0.3 %
Interest expense   2,012   0.2 %   2,350 0.2 %
Income (loss) before income tax (13,271 ) -1.2 % 3,411 0.3 %
Income tax expense (benefit)   (5,051 ) -0.4 %   1,025 0.1 %
Net income (loss) $ (8,220 ) -0.7 % $ 2,386 0.2 %
 
Basic and diluted earnings (loss) per share data:
Basic earnings (loss) per share $ (0.25 ) $ 0.08
Basic weighted average shares outstanding   32,307     31,035
 
Diluted earnings (loss) per share $ (0.25 ) $ 0.08
Diluted weighted average shares outstanding   32,307     31,301
 
 
 
(1) Percentages may not foot due to rounding.
 
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
   
November 2, 2013 February 2, 2013
 

ASSETS
Cash and cash equivalents $ 23,717 $ 17,937
Merchandise inventories, net 551,550 413,928
Prepaid expenses and other current assets   45,040     35,467  
Total current assets 620,307 467,332
 
Property, equipment and leasehold improvements, net 294,595 290,701
Intangible asset 14,910 14,910
Other non-current assets, net   26,994     21,928  
Total assets $ 956,806   $ 794,871  
 

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 208,202 $ 110,826
Accrued expenses and other current liabilities   63,816     97,246  
Total current liabilities 272,018 208,072
 
Long-term debt obligations 142,548 11,585
Other long-term liabilities   111,700     110,344  
Total liabilities   526,266     330,001  
 
Commitments and contingencies - -
 

Common stock, par value $0.01, 100,000 shares authorized, 32,835 and 32,014 shares issued, respectively
328 320
Additional paid-in capital 393,326 376,615
Less treasury stock - at cost, 1,626 and 0 shares, respectively (32,304 ) (701 )
Accumulated other comprehensive loss (5,851 ) (6,135 )
Retained earnings   75,041     94,771  
Total stockholders' equity   430,540     464,870  
Total liabilities and stockholders' equity $ 956,806   $ 794,871  
 
   
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Thirty-Nine Weeks Ended
November 2, 2013 October 27, 2012
Cash flows from operating activities:
Net income (loss) $ (8,220 ) $ 2,386
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation, amortization, and impairment of long-lived assets 46,052 44,894
Loss on retirements of property and equipment 257 -
Deferred income taxes (847 ) (98 )
Tax benefit (deficiency) from stock-based compensation 1,798 (1,391 )
Stock-based compensation expense 6,580 5,459
Amortization of debt issuance costs 204 353
Excess tax benefits from stock-based compensation (2,041 ) (851 )
Deferred compensation obligation 236 92
Amortization of employee benefit related costs 458 310
Construction allowances from landlords 4,162 4,133
Changes in operating assets and liabilities:
Increase in merchandise inventories (137,622 ) (162,871 )
(Increase) decrease in other assets (14,733 ) 10,262
Increase in accounts payable and other liabilities   58,248     157,379  
Total adjustments   (37,248 )   57,671  
Net cash (used in) provided by operating activities   (45,468 )   60,057  
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (46,717 ) (35,610 )
Proceeds from disposal of assets   11     -  
Net cash used in investing activities   (46,706 )   (35,610 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings 382,510 262,620
Payments of revolving credit facility borrowings (250,910 ) (259,620 )
Payments of long-term debt obligations (551 ) (18,499 )
Payments of debt issuance costs (128 ) -
Repurchases of common stock (31,367 ) (61 )
Payments for stock related compensation (2,257 ) (522 )
Proceeds from exercise of stock awards 10,126 18,336
Excess tax benefits from stock-based compensation 2,041 851
Cash dividends paid   (11,510 )   (8,753 )
Net cash provided by (used in) financing activities   97,954     (5,648 )
Net increase in cash and cash equivalents 5,780 18,799
 
Cash and cash equivalents:
Beginning of period   17,937     18,621  
End of period $ 23,717   $ 37,420  
 
       
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, 2013 October 27, 2012 November 2, 2013 October 27, 2012
 
Net income (loss):
On a U.S. GAAP basis $ (10,971 ) $ (8,858 ) $ (8,220 ) $ 2,386
South Hill consolidation related charges, net of tax of

$1,832, $503, $7,815 and $503, respectively
2,552 866 12,718 866
Former Chief Executive Officer resignation related

charges, net of tax of $1,103
  -     -     -     1,897
On a non-U.S. GAAP basis $ (8,419 ) $ (7,992 ) $ 4,498   $ 5,149
 
Diluted earnings (loss) per share:
On a U.S. GAAP basis $ (0.34 ) $ (0.28 ) $ (0.25 ) $ 0.08
South Hill consolidation related charges 0.08 0.03 0.39 0.03
Former Chief Executive Officer resignation related charges   -     -     -     0.06
On a non-U.S. GAAP basis $ (0.26 ) $ (0.25 ) $ 0.14   $ 0.16 (1)
 
(1) EPS does not foot due to rounding.
 

Copyright Business Wire 2010

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