Stage Stores Reports First Quarter Results

HOUSTON--()--Stage Stores, Inc. (NYSE: SSI) today reported financial results for the first quarter ended May 3, 2014.

Total sales from continuing operations for the first quarter were $372 million. Comparable store sales for the quarter decreased 0.2%. The Company noted that its cosmetics, children’s, misses sportswear and footwear categories all had comparable store sales increases for the quarter. Geographically, the Northwest, Southwest and Southeast regions all outperformed.

The Company reported a loss for the quarter from continuing operations of $12.0 million, or $0.38 per share. Results from continuing operations exclude the sale of the Steele’s division that was completed on March 7, 2014.

Commenting on the Company’s first quarter results, Michael Glazer, President and Chief Executive Officer, stated, “Comparable store sales were flat in a volatile first quarter, marked by a highly promotional retail environment and unseasonable weather. Our results were also impacted by our sales mix for the quarter, which was heavily weighted with clearance goods. While this hurt our gross margin, we feel very good about our inventory content heading into the rest of the year.”

Reported Results

Including discontinued operations, the Company reported a net loss for this year’s first quarter of $18.8 million, or $0.60 per share. For last year’s first quarter, including discontinued operations and one-time items, the Company reported a net loss of $6.9 million, or $0.21 per share. One-time items recorded in the prior year were associated with the consolidation of the Company’s South Hill, Virginia operations into its Houston headquarters and totaled approximately $9.7 million, or $0.19 per share.

Full Year 2014 Guidance

The Company is maintaining its comparable store sales guidance range for the year of flat to up 2%, as well as its EPS guidance range from continuing operations of $1.25 to $1.35.

   
FY 2014 OUTLOOK* FY 2013*
Sales ($mm) $1,640 - $1670 $1,610
 
EPS $1.25 - $1.35 $1.22**
 
Diluted Shares (m) 32,300 32,311

*From continuing operations.

**Adjusted to exclude one-time items.

 

Store Activity

The Company reported that it opened seven new stores and closed two stores during the first quarter. Bealls stores were opened in Truth or Consequences, NM and Carson City and Fallon, NV; Goody’s stores were opened in Beaver Dam, KY and Sylacauga, AL; and Peebles stores were opened in Wadsworth, OH and Waynesburg, PA. The Company also installed 13 Estee Lauder and 13 Clinique counters during the quarter.

Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its first quarter 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, May 30, 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 and Stage names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company currently operates 853 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 sales, comparable store sales, EPS and diluted share count outlooks for 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 2, 2014, 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 Operations
(in thousands, except earnings per share)
(Unaudited)
       
Thirteen Weeks Ended
May 3, 2014 May 4, 2013
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 372,040 100.0 % $ 372,103 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   294,099   79.1 %   282,474   75.9 %
Gross profit 77,941 20.9 % 89,629 24.1 %
Selling, general and administrative expenses 96,054 25.8 % 97,947 26.3 %
Store opening costs 808 0.2 % 975 0.3 %
Interest expense   724   0.2 %   586   0.2 %
Income before income tax (19,645 ) -5.3 % (9,879 ) -2.7 %
Income tax benefit   (7,599 ) -2.0 %   (3,691 ) -1.0 %
Loss from continuing operations $ (12,046 ) -3.2 % $ (6,188 ) -1.7 %
Loss from discontinued operations, net of tax benefit of $4,257 and $398, respectively $ (6,748 ) -1.8 % $ (668 ) -0.2 %
Net loss $ (18,794 ) -5.1 % $ (6,856 ) -1.8 %
 
Basic loss per share data:
Continuing operations $ (0.38 ) $ (0.19 )
Discontinued operations $ (0.22 ) $ (0.02 )
Basic loss per share $ (0.60 ) $ (0.21 )
Basic weighted average shares outstanding   31,492     32,306  
 
Diluted loss per share data:
Continuing operations $ (0.38 ) $ (0.19 )
Discontinued operations $ (0.22 ) $ (0.02 )
Diluted loss per share $ (0.60 ) $ (0.21 )
Diluted weighted average shares outstanding   31,492     32,306  
 
(1) Percentages may not foot due to rounding.
 
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
   
May 3, 2014 May 4, 2013
 

ASSETS

Cash and cash equivalents $ 24,361 $ 14,762
Merchandise inventories, net 449,547 434,407
Prepaid expenses and other current assets 47,526 40,082
Total current assets 521,434 489,251
 
Property, equipment and leasehold improvements, net 281,936 282,534
Intangible asset 14,910 14,910
Other non-current assets, net 25,166 24,142
Total assets $ 843,446 $ 810,837

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 147,651 $ 125,707
Accrued expenses and other current liabilities 68,658 69,549
Total current liabilities 216,309 195,256
 
Long-term debt obligations 90,208 60,871
Other long-term liabilities 100,170 100,266
Total liabilities 406,687 356,393
 
Commitments and contingencies - -
 

Common stock, par value $0.01, 100,000 shares authorized, 31,721 and 31,222 shares issued, respectively

317 312
Additional paid-in capital 389,327 384,295
Less treasury stock - at cost, 0 and 0 shares, respectively (1,005) (967)
Accumulated other comprehensive loss (4,554) (4,616)
Retained earnings 52,674 75,420
Total stockholders' equity 436,759 454,444
Total liabilities and stockholders' equity $ 843,446 $ 810,837
 
 
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
   
Thirteen Weeks Ended
May 3, 2014 May 4, 2013
Cash flows from operating activities:
Net loss $ (18,794 ) $ (6,856 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and impairment of long-lived assets 15,218 15,047
Loss on retirements of property and equipment 677 186
Deferred income taxes (420 ) (428 )
Tax benefit from stock-based compensation 280 1,597
Stock-based compensation expense 1,626 1,979
Amortization of debt issuance costs 75 64
Excess tax benefits from stock-based compensation (815 ) (1,792 )
Deferred compensation obligation 38 158
Amortization of employee benefit related costs 100 153
Construction allowances from landlords 2,425 968
Changes in operating assets and liabilities:
Increase in merchandise inventories (15,140 ) (38,705 )
Increase in other assets (8,548 ) (7,525 )
Increase in accounts payable and other liabilities   17,156     375  
Total adjustments   12,672     (27,923 )
Net cash used in operating activities   (6,122 )   (34,779 )
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (14,714 ) (16,809 )
Proceeds from disposal of assets   1,397     -  
Net cash used in investing activities   (13,317 )   (16,809 )
 
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings 116,340 103,125
Payments of revolving credit facility borrowings (86,020 ) (48,475 )
Payments of long-term debt obligations (1,200 ) (180 )
Payments for stock related compensation (1,955 ) (2,088 )
Proceeds from exercise of stock awards 5,010 9,328
Excess tax benefits from stock-based compensation 815 1,792
Cash dividends paid   (3,952 )   (3,253 )
Net cash provided by financing activities   29,038     60,249  
Net increase in cash and cash equivalents 9,599 8,661
 
Cash and cash equivalents:
Beginning of period   14,762     17,937  
End of period $ 24,361   $ 26,598  
 
 
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
   
Thirteen Weeks Ended
May 3, 2014 May 4, 2013
 
Net loss from continuing operations:
On a U.S. GAAP basis $ (12,046 ) $ (6,188 )
South Hill consolidation related charges, net of tax of $3,616   -     6,062  
On a non-U.S. GAAP basis $ (12,046 ) $ (126 )
 
Diluted earnings per share:
On a U.S. GAAP basis $ (0.38 ) $ (0.19 )
South Hill consolidation related charges   -     0.19  
On a non-U.S. GAAP basis $ (0.38 ) $ -  
 

Contacts

Stage Stores, Inc.
Bob Aronson, 800-579-2302
Vice President, Investor Relations
baronson@stagestores.com

Release Summary

Q1 2014 results.

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Contacts

Stage Stores, Inc.
Bob Aronson, 800-579-2302
Vice President, Investor Relations
baronson@stagestores.com