HOUSTON--(BUSINESS WIRE)--Stage Stores, Inc. (NYSE: SSI) today reported financial results for the fourth quarter and fiscal year ended February 1, 2014. The Company reported adjusted earnings for fiscal 2013, excluding one-time items and the loss associated with the Steele’s division, of $1.22 per diluted share compared to $1.44 per diluted share for fiscal 2012. The Company has entered into a definitive agreement for the sale of the Steele’s division, which it expects to consummate during the first quarter of 2014.
Michael Glazer, President and Chief Executive Officer, stated, “Stage Stores had many accomplishments in 2013 that will contribute to our future profitability and growth. A few of the year’s highlights included:
- consolidating our South Hill buying office into our Houston headquarters,
- replatforming of our eCommerce website, which contributed to a 31% increase in direct-to-consumer sales,
- adding several high profile brands across merchandise categories,
- growing our private label credit card penetration rate by 290 basis points, and
- continuing to grow our cosmetics business.
In addition to our many accomplishments, we also increased our quarterly dividend rate by 25%, continuing with our long tradition of returning capital to our shareholders.”
2013 Results
The Company follows the retail reporting calendar, which included an extra week of sales in the fourth quarter of 2012. For the 13-week fourth quarter of 2013, the Company reported total sales, excluding Steele’s, of $493 million compared to $519 million for the 14-week fourth quarter of 2012. Comparable store sales for the quarter decreased 3.4%; however, many retailers report comparable store sales on a shifted calendar, which excludes the first week of the 2012 fiscal quarter. On this shifted basis, comparable store sales decreased 1.1% for the quarter.
Cosmetics, footwear, children’s, related sportswear, plus sizes and men’s businesses all performed better than the Company average for the quarter. Geographically, the South Central and Northwest regions outperformed.
For the 2013 fiscal year, the Company reported total sales, excluding Steele’s, of $1,610 million versus $1,628 million for the 2012 fiscal year. Comparable store sales for the year decreased 1.5%, while on a shifted calendar basis, which excludes the first week of 2012, comparable store sales decreased 1.1%.
The Company reported earnings for the fourth quarter of $24.9 million, or $0.78 per diluted share, this year compared to earnings of $35.8 million, or $1.09 per diluted share, for the same period last year. One-time items recorded in this year’s fourth quarter, totaling approximately $10.5 million, or $0.21 per share, include items associated with the consolidation of the Company’s South Hill, Virginia operations into its Houston headquarters and an impairment charge related to Steele’s. One-time items recorded in last year’s fourth quarter, totaling approximately $2.6 million, or $0.05 per share, are associated with the South Hill consolidation. For the 2013 fiscal year, the Company reported earnings of $16.6 million, or $0.51 per diluted share, compared to earnings of $38.2 million, or $1.19 per diluted share, for fiscal 2012. One-time items, including the Steele’s impairment charge, total approximately $31.1 million, or $0.59 per share, this year versus approximately $6.9 million, or $0.14 per share, last year. Steele’s had a net loss of $0.12 per share this year and last year.
2014 Guidance
Mr. Glazer concluded, “We are optimistic about our prospects for 2014. The initiatives we undertook last year should drive 2014 growth. We plan on opening, expanding or relocating 40 to 50 stores, introducing additional high profile brands, rolling out more cosmetics counters and leveraging our eCommerce platform to accelerate the growth of our direct-to-consumer business.”
The Company expects that comparable store sales for the year, excluding Steele’s, will range from flat to up 2% and that adjusted EPS will be in a range of $1.35 to $1.45.
| FY 2014 OUTLOOK* | FY 2013* | ||||||||
| Sales ($mm) | $1,640 | - | $1,670 | $1,610 | |||||
| Adjusted EPS | $1.35 | - | $1.45 | $1.22 | |||||
| Diluted Shares (m) | 32,200 | 32,765 | |||||||
|
*Excludes Steele’s. |
|||||||||
The Company added that it expects net capital expenditures of approximately $60 million compared to $57 million in FY 2013.
Conference Call Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter and full year results. Interested parties can participate in the Company’s conference call by dialing 703-639-1319. 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, March 14, 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, 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 883 stores in 40 states, including 35 Steele’s stores. 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, comparable store sales, adjusted EPS and diluted share count outlooks for the 2014 fiscal year. Forward-looking statements also include comments regarding the number of stores that the Company expects to open, expand and relocate, and the Company’s outlook for net capital expenditures, in 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 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 | Fourteen Weeks Ended | |||||||||||
| February 1, 2014 | February 2, 2013 | |||||||||||
| Amount | % to Sales (1) | Amount | % to Sales (1) | |||||||||
| Net sales | $ | 499,411 | 100.0 | % | $ | 527,899 | 100.0 | % | ||||
| Cost of sales and related buying, occupancy and distribution expenses | 357,386 | 71.6 | % | 357,001 | 67.6 | % | ||||||
| Gross profit | 142,025 | 28.4 | % | 170,898 | 32.4 | % | ||||||
| Selling, general and administrative expenses | 100,731 | 20.2 | % | 112,768 | 21.4 | % | ||||||
| Store opening costs | 486 | 0.1 | % | 500 | 0.1 | % | ||||||
| Interest expense | 732 | 0.1 | % | 661 | 0.1 | % | ||||||
| Income before income tax | 40,076 | 8.0 | % | 56,969 | 10.8 | % | ||||||
| Income tax expense | 15,214 | 3.0 | % | 21,176 | 4.0 | % | ||||||
| Net income | $ | 24,862 | 5.0 | % | $ | 35,793 | 6.8 | % | ||||
| Basic and diluted earnings per share data: | ||||||||||||
| Basic earnings per share | $ | 0.79 | $ | 1.10 | ||||||||
| Basic weighted average shares outstanding | 31,215 | 31,957 | ||||||||||
| Diluted earnings per share | $ | 0.78 | $ | 1.09 | ||||||||
| Diluted weighted average shares outstanding | 31,438 | 32,376 | ||||||||||
| (1) Percentages may not foot due to rounding. | ||||||||||||
| Stage Stores, Inc. | ||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||
| (in thousands, except earnings per share) | ||||||||||||
| (Unaudited) | ||||||||||||
| Fifty-Two Weeks Ended | Fifty-Three Weeks Ended | |||||||||||
| February 1, 2014 | February 2, 2013 | |||||||||||
| Amount | % to Sales (1) | Amount | % to Sales (1) | |||||||||
| Net sales | $ | 1,633,556 | 100.0 | % | $ | 1,645,800 | 100.0 | % | ||||
| Cost of sales and related buying, occupancy and distribution expenses | 1,202,754 | 73.6 | % | 1,186,025 | 72.1 | % | ||||||
| Gross profit | 430,802 | 26.4 | % | 459,775 | 27.9 | % | ||||||
| Selling, general and administrative expenses | 398,294 | 24.4 | % | 392,727 | 23.9 | % | ||||||
| Store opening costs | 2,959 | 0.2 | % | 3,657 | 0.2 | % | ||||||
| Interest expense | 2,744 | 0.2 | % | 3,011 | 0.2 | % | ||||||
| Income before income tax | 26,805 | 1.6 | % | 60,380 | 3.7 | % | ||||||
| Income tax expense | 10,163 | 0.6 | % | 22,201 | 1.3 | % | ||||||
| Net income | $ | 16,642 | 1.0 | % | $ | 38,179 | 2.3 | % | ||||
| Basic and diluted earnings per share data: | ||||||||||||
| Basic earnings per share | $ | 0.51 | $ | 1.20 | ||||||||
| Basic weighted average shares outstanding | 32,034 | 31,278 | ||||||||||
| Diluted earnings per share | $ | 0.51 | $ | 1.19 | ||||||||
| Diluted weighted average shares outstanding | 32,311 | 31,600 | ||||||||||
| (1) Percentages may not foot due to rounding. | ||||||||||||
| Stage Stores, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands, except par value) | ||||||||
| (Unaudited) | ||||||||
| February 1, 2014 | February 2, 2013 | |||||||
|
ASSETS |
||||||||
| Cash and cash equivalents | $ | 14,762 | $ | 17,937 | ||||
| Merchandise inventories, net | 434,407 | 413,928 | ||||||
| Prepaid expenses and other current assets | 40,082 | 35,467 | ||||||
| Total current assets | 489,251 | 467,332 | ||||||
| Property, equipment and leasehold improvements, net | 282,534 | 290,701 | ||||||
| Intangible asset | 14,910 | 14,910 | ||||||
| Other non-current assets, net | 24,142 | 21,928 | ||||||
| Total assets | $ | 810,837 | $ | 794,871 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Accounts payable | $ | 125,707 | $ | 110,826 | ||||
| Income taxes payable | 5,345 | 14,929 | ||||||
| Accrued expenses and other current liabilities | 64,204 | 82,317 | ||||||
| Total current liabilities | 195,256 | 208,072 | ||||||
| Long-term debt obligations | 60,871 | 11,585 | ||||||
| Deferred Taxes | 15,644 | 19,461 | ||||||
| Other long-term liabilities | 84,622 | 90,883 | ||||||
| Total liabilities | 356,393 | 330,001 | ||||||
| Commitments and contingencies | - | - | ||||||
|
Common stock, par value $0.01, 100,000 shares authorized, 31,222 and 32,014 shares issued, respectively |
312 | 320 | ||||||
| Additional paid-in capital | 384,295 | 376,615 | ||||||
| Less treasury stock - at cost, 0 and 0 shares, respectively | (967 | ) | (701 | ) | ||||
| Accumulated other comprehensive loss | (4,616 | ) | (6,135 | ) | ||||
| Retained earnings | 75,420 | 94,771 | ||||||
| Total stockholders' equity | 454,444 | 464,870 | ||||||
| Total liabilities and stockholders' equity | $ | 810,837 | $ | 794,871 | ||||
| Stage Stores, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
|
Fifty-Two |
Fifty-Three |
|||||||
| February 1, 2014 | February 2, 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 16,642 | $ | 38,179 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, amortization and impairment of long-lived assets | 69,925 | 60,426 | ||||||
|
Loss on retirements of property, equipment and leasehold improvements |
860 | 454 | ||||||
| Deferred income taxes | (808 | ) | 1,108 | |||||
| Tax benefit (deficiency) from stock-based compensation | 1,761 | (1,311 | ) | |||||
| Stock-based compensation expense | 8,417 | 7,803 | ||||||
| Amortization of debt issuance costs | 279 | 417 | ||||||
| Excess tax benefits from stock-based compensation | (2,076 | ) | (1,024 | ) | ||||
| Deferred compensation obligation | 266 | (134 | ) | |||||
| Amortization of employee benefit related costs | 610 | 414 | ||||||
| Construction allowances from landlords | 4,162 | 4,193 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in merchandise inventories | (20,479 | ) | (65,984 | ) | ||||
| Increase in other assets | (6,375 | ) | (4,802 | ) | ||||
| Increase (decrease) in accounts payable and other liabilities | (26,657 | ) | 36,242 | |||||
| Total adjustments | 29,885 | 37,802 | ||||||
| Net cash provided by operating activities | 46,527 | 75,981 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to property, equipment and leasehold improvements | (61,263 | ) | (49,489 | ) | ||||
| Proceeds from disposal of assets | 27 | 50 | ||||||
| Net cash used in investing activities | (61,236 | ) | (49,439 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facility borrowings | 494,885 | 357,910 | ||||||
| Payments of revolving credit facility borrowings | (445,490 | ) | (376,410 | ) | ||||
| Payments of long-term debt obligations | (744 | ) | (18,674 | ) | ||||
| Payments of debt issuance costs | (128 | ) | - | |||||
| Repurchases of common stock | (31,367 | ) | (61 | ) | ||||
| Payments for stock related compensation | (2,381 | ) | (326 | ) | ||||
| Proceeds from exercise of stock awards | 10,149 | 21,306 | ||||||
| Excess tax benefits from stock-based compensation | 2,076 | 1,024 | ||||||
| Cash dividends paid | (15,466 | ) | (11,995 | ) | ||||
| Net cash provided by (used in) financing activities | 11,534 | (27,226 | ) | |||||
| Net decrease in cash and cash equivalents | (3,175 | ) | (684 | ) | ||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | 17,937 | 18,621 | ||||||
| End of period | $ | 14,762 | $ | 17,937 | ||||
| Stage Stores, Inc. | |||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||
| (in thousands, except earnings per share) | |||||||||||||
| (Unaudited) | |||||||||||||
|
Thirteen |
Fourteen |
Fifty-Two |
Fifty-Three |
||||||||||
| February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | ||||||||||
| Net income: | |||||||||||||
| On a U.S. GAAP basis | $ | 24,862 | $ | 35,793 | $ | 16,642 | $ | 38,179 | |||||
|
South Hill consolidation related charges, net of tax of $1,170, $827, $8,985 and $1,330, respectively |
2,052 | 1,422 | 14,770 | 2,288 | |||||||||
|
Steele's impairment charge, net of tax of $2,722 |
4,538 | - | 4,538 | - | |||||||||
|
Steele's operating results, net of tax of $442, $764, $2,465 and $2,243, respectively |
745 | 458 | 4,036 | 3,736 | |||||||||
|
Former Chief Executive Officer resignation related charges, net of tax of $113 and $1,216, respectively |
- | 195 | - | 2,092 | |||||||||
| On a non-U.S. GAAP basis | $ | 32,197 | $ | 37,868 | $ | 39,986 | $ | 46,295 | |||||
| Diluted earnings per share: | |||||||||||||
| On a U.S. GAAP basis | $ | 0.78 | $ | 1.09 | $ | 0.51 | $ | 1.19 | |||||
| South Hill consolidation related charges | 0.07 | 0.04 | 0.45 | 0.07 | |||||||||
| Steele's impairment charge | 0.14 | - | 0.14 | - | |||||||||
| Steele's operating results | 0.02 | 0.01 | 0.12 | 0.12 | |||||||||
| Former Chief Executive Officer resignation related charges | - | 0.01 | - | 0.07 | |||||||||
| On a non-U.S. GAAP basis | $ | 1.01 | $ | 1.15 | $ | 1.22 | $ | 1.44 |
(1) |
||||
| (1) EPS does not foot due to rounding. | |||||||||||||