Stage Stores' Third Quarter Results Improve 22%; Company Raises 2012 Guidance

Stage Stores' Third Quarter Results Improve 22%; Company Raises 2012 Guidance

HOUSTON--(BUSINESS WIRE)-- Stage Stores, Inc. (NYS: SSI) today reported a net loss for the third quarter ended October 27, 2012 of $8.9 million, or $0.28 per share. This compares to a net loss of $11.3 million, or $0.36 per share, for the prior year third quarter.

For the first three quarters of the fiscal year, the Company earned $0.08 per diluted share versus a net loss of $0.05 per share in the same period last year. Excluding the 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, the Company earned $0.14 per diluted share.


As previously reported by the Company, sales for the third quarter were $371 million as compared to sales of $333 million last year. Comparable store sales for the third quarter increased 8.1%. For the first three quarters of the fiscal year, the Company reported total sales of $1,118 million and a comparable store sales increase of 5.3%.

Michael Glazer, President and Chief Executive Officer, commented, "The third quarter was another outstanding quarter for our company as sales grew, our bottom-line improved and notable progress was made on our strategic initiatives. We achieved a strong 8.1% comparable store sales increase during the quarter as every merchandise category and every region of the country posted a same store sales gain. Our comparable store sales increase, combined with a 30 basis points improvement in the gross profit rate and 110 basis points reduction in the SG&A expense rate, enabled us to achieve a 22% improvement in our per share results.

"During the quarter, we built on the excitement in our stores with new brands, desirable merchandise and compelling promotional events. Our Direct-To-Consumer sales increased 66% over last year and we expect this business to exceed $25 million in sales for the year. In addition, our new store growth continued as we opened ten traditional stores and nine Steele's stores."

Mr. Glazer concluded, "We have confidence that our momentum will continue in the fourth quarter. Our new loyalty program with significantly enhanced benefits should certainly excite our private label credit card holders. In collaboration with our partner, Alliance Data, we just reissued new cards to more than 2 million customers. In addition, we have strong marketing campaigns and in-store initiatives planned for the fourth quarter, including some of our most exciting and compelling holiday offers and deals ever. For the first time, our stores will be open on Thanksgiving night from 8:00 p.m. to midnight. We will reopen our stores at 6:00 a.m. on Black Friday with continued door busters, deals and prizes."

Updated Full Year 2012 Outlook

As a result of its better than projected performance over the first three quarters of the year, the Company has 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 4.5% to 5.5%. EPS, excluding the $0.06 one-time charge, is projected to be between $1.20 and $1.28. Compared to last year's EPS of $0.92, the current outlook represents a year-over-year EPS increase of 30% to 39%.

The Company noted that, beginning in fiscal 2013, it will no longer report monthly sales. The Company will report its sales on a quarterly basis at the same time that it reports its quarterly results.

  FY 2012 OUTLOOK     FY 2011
Sales ($mm) $1,633 - $1,646 $1,512
 
Diluted EPS $1.20 - $1.28 $0.92
 
Diluted Shares (m) 32,037 33,278
 

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 703-639-1356. 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 30, 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 866 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 Direct-To-Consumer sales for the 2012 fiscal year. Forward-looking statements also 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 Operations
(in thousands, except per share data)
(Unaudited)
       
Thirteen Weeks Ended
October 27, 2012 October 29, 2011
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 370,583 100.0 % $ 333,508 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   290,719   78.4 %   262,345   78.7 %
Gross profit 79,864 21.6 % 71,163 21.3 %
Selling, general and administrative expenses 92,472 25.0 % 86,994 26.1 %
Store opening costs 1,629 0.4 % 1,578 0.5 %
Interest expense, net of income of $0 and $0, respectively   568   0.2 %   1,015   0.3 %
Income before income tax (14,805 ) -4.0 % (18,424 ) -5.5 %
Income tax benefit   (5,947 ) -1.6 %   (7,118 ) -2.1 %
Net loss $ (8,858 ) -2.4 % $ (11,306 ) -3.4 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ (0.28 ) $ (0.36 )
Basic weighted average shares outstanding   31,558     31,139  
 
Diluted earnings per share $ (0.28 ) $ (0.36 )
Diluted weighted average shares outstanding   31,558     31,139  
 
 
 
(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
October 27, 2012 October 29, 2011
Amount % to Sales (1) Amount % to Sales (1)
 
Net sales $ 1,117,901 100.0 % $ 1,032,823 100.0 %
Cost of sales and related buying, occupancy and distribution expenses   829,024 74.2 %   772,583   74.8 %
Gross profit 288,877 25.8 % 260,240 25.2 %
Selling, general and administrative expenses 279,959 25.0 % 256,671 24.9 %
Store opening costs 3,157 0.3 % 5,218 0.5 %
Interest expense, net of income of $0 and $24, respectively   2,350 0.2 %   2,806   0.3 %
Income before income tax 3,411 0.3 % (4,455 ) -0.4 %
Income tax expense   1,025 0.1 %   (2,701 ) -0.3 %
Net income (loss) $ 2,386 0.2 % $ (1,754 ) -0.2 %
 
Basic and diluted earnings per share data:
Basic earnings per share $ 0.08 $ (0.05 )
Basic weighted average shares outstanding   31,035   33,885  
 
Diluted earnings per share $ 0.08 $ (0.05 )
Diluted weighted average shares outstanding   31,301   33,885  
 
 
 
(1) Percentages may not foot due to rounding.
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
 
October 27, 2012 January 28, 2012
 

ASSETS

Cash and cash equivalents $ 37,420 $ 18,621
Merchandise inventories, net 510,815 347,944
Prepaid expenses and other current assets   20,893     33,434  
Total current assets 569,128 399,999
 
Property, equipment and leasehold improvements, net 296,845 300,717
Intangible asset 14,910 14,910
Other non-current assets, net   21,538     19,713  
Total assets $ 902,421   $ 735,339  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 250,864 $ 106,022
Current portion of debt obligations 727 13,782
Accrued expenses and other current liabilities   79,804     66,495  
Total current liabilities 331,395 186,299
 
Long-term debt obligations 33,277 35,721
Other long-term liabilities   109,305     100,613  
Total liabilities   473,977     322,633  
 
Commitments and contingencies
 
Common stock, par value $0.01, 100,000 shares authorized, 31,851 and 30,444 shares issued, respectively
319 304
Additional paid-in capital 371,417 349,366
Less treasury stock - at cost, 4 and 0 shares, respectively (988 ) (835 )
Accumulated other comprehensive loss (4,556 ) (4,748 )
Retained earnings   62,252     68,619  
Total stockholders' equity   428,444     412,706  
Total liabilities and stockholders' equity $ 902,421   $ 735,339  
 
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Thirty-Nine Weeks Ended
October 27, 2012 October 29, 2011
Cash flows from operating activities:
Net income (loss) $ 2,386 $ (1,754 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization, and impairment of long-lived assets 44,894 46,027
Loss on retirements of property and equipment - 123
Deferred income taxes (98 ) (28 )
Tax (deficiency) benefit from stock-based compensation (1,391 ) 774
Stock-based compensation expense 5,459 6,354
Amortization of debt issuance costs 353 251
Excess tax benefits from stock-based compensation (851 ) (1,252 )
Deferred compensation obligation 92 114
Amortization of employee benefit related costs 310 118
Construction allowances from landlords 4,133 4,487
Changes in operating assets and liabilities:
Increase in merchandise inventories (162,871 ) (122,136 )
Decrease (increase) in other assets 10,262 (1,786 )
Increase in accounts payable and other liabilities   157,379     83,093  
Total adjustments   57,671     16,139  
Net cash provided by operating activities   60,057     14,385  
 
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (35,610 ) (33,166 )
Proceeds from retirements of property and equipment   -     122  
Net cash used in investing activities   (35,610 )  

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