Stage Stores Reports Second Quarter Results, Raises Guidance, and Declares Quarterly Cash Dividend
Stage Stores, Inc. (NYSE:SSI) today reported financial results for the second quarter ended July 29, 2017. For the second
quarter, comparable sales were down 3.6%. The net loss for the quarter was $6.3 million, or a $0.23 loss per diluted share. On an
adjusted basis, the second quarter net loss was $4.1 million, or $0.15 per diluted share.
“We are pleased to have gained momentum in our business during the second quarter, with sequential improvement that culminated
with comparable sales turning positive in July,” said Michael Glazer, President and Chief Executive Officer. “Several encouraging
trends have emerged that contributed to our 600 basis point comparable sales improvement from the first quarter of this year.
Notably, our stores in the four energy states, which include the border stores and account for more than 50% of our comparable
sales, outperformed the balance of the chain. Our direct-to-consumer business grew double digits and our non-apparel categories had
a positive quarterly comp increase.
“As we continue to integrate our new off-price Gordmans business into the Stage infrastructure, we are excited to see the
overwhelming support from the vendor community,” continued Mr. Glazer. “Our work to date, along with the compelling merchandise
value in the marketplace, furthers our strong prospects for the growth of this business.
“Looking ahead to the Fall season, we remain disciplined in managing expenses and inventory. We feel great about our inventory
position, which is down 7% in our department stores. Based on our improved performance, we are raising guidance for the fiscal
year. We are managing our business for the long term with a focus on generating positive free cash flow and delivering value to our
shareholders through the dividend.”
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.05 cents per share on the
Company’s common stock, payable on September 13, 2017 to shareholders of record at the close of business on August 29, 2017.
Second Quarter Reported Results
For the second quarter, comparable sales decreased 3.6%. Total sales increased 11.4% to $377.1 million, as compared to $338.4
million in the prior year. Net loss was $6.3 million, or $0.23 per diluted share, versus $0.04 million, or $0.00 per diluted share,
for the prior year.
On an adjusted basis, second quarter net loss was $4.1 million, or $0.15 per diluted share, versus net income of $0.8 million,
or $0.03 per diluted share, in the prior year. Adjusted second quarter 2017 results exclude after-tax charges related to the
Gordmans acquisition and other store closures of approximately $2.2 million, or $0.08 per diluted share. The prior year’s adjusted
second quarter results exclude after-tax charges related to severance associated with workforce reductions and strategic store
closures of approximately $0.8 million, or $0.03 per diluted share.
2017 Guidance
The Company is raising its guidance for 2017. Adjusted loss per diluted share is now expected to be between $0.90 and $1.35,
compared to the prior guidance of an adjusted loss of $0.95 to $1.55. Updated 2017 guidance assumes comparable sales are in a range
of -4% to -7%, excludes after-tax charges associated with the Gordmans acquisition, and store closures and other strategic
initiatives totaling approximately $0.23 per diluted share. Weighted average shares for the year are expected to be approximately
27.5 million. The effective tax rate is projected to be between 32% and 34%.
Capital expenditures in 2017, net of construction allowances from landlords, are expected to be $40 million, compared to $67
million in 2016.
Conference Call / Webcast Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its results. Interested parties may
participate in the Company’s conference call by dialing 844-415-6993. Alternatively, interested parties may listen to a live
webcast of the conference call through the Investor Relations section of the Company’s website ( corporate.stage.com ) under the “Webcasts” caption. A replay of the conference call
will be available online until midnight on Friday, September 1, 2017.
About Stage Stores
Stage Stores, Inc. is a leading retailer of trend-right, name-brand values for apparel, accessories, cosmetics, footwear and
home goods. As of August 17, 2017, the Company operates in 42 states through 793 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE
specialty department stores and 58 GORDMANS off-price stores, as well as an e-commerce website at www.stage.com . For more information about Stage Stores, visit the Company’s
website at corporate.stage.com .
Use of Adjusted (Non-GAAP) Financial Measures
The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However,
management believes that certain non-GAAP financial measures help to facilitate comparisons of Company operating performance across
periods. This release includes non-GAAP financial measures identified as “adjusted” results. A reconciliation of all non-GAAP
financial measures to the most comparable GAAP financial measures is provided in a table included with this release.
Caution Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words
“anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,”
“forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly, descriptions of
the Company’s objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements
relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism
about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking
statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate.
Forward-looking statements are based upon management’s then-current views and assumptions regarding future events and operating
performance. Although management believes the expectations expressed in forward-looking statements are based on reasonable
assumptions within the bounds of its knowledge, forward-looking statements involve risks, uncertainties and other factors which may
materially affect the Company’s business, financial condition, results of operations or liquidity.
Forward-looking statements are not guarantees of future performance and actual results may differ materially from those
discussed in the forward-looking statements as a result of various factors, including, but not limited to, economic conditions,
cost and availability of goods, inability to successfully execute strategic initiatives, competitive pressures, economic pressures
on the Company and its customers, freight costs, the risks discussed in the Risk Factors section of the Company’s most recent
Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”), and other factors discussed from time to
time in the Company’s other SEC filings. This release should be read in conjunction with such filings, and you should consider all
of such risks, uncertainties and other factors carefully in evaluating forward-looking statements.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The
Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any further disclosures the Company makes on related subjects in its
public announcements and SEC filings.
(Tables to Follow)
| |
|
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
|
| |
|
|
|
Three Months Ended |
|
|
|
July 29, 2017 |
|
July 30, 2016 |
|
|
|
Amount |
|
% to Sales (a) |
|
Amount |
|
% to Sales (a) |
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
|
$ |
377,081 |
|
|
100.0 |
% |
|
$ |
338,385 |
|
|
100.0 |
% |
| Cost of sales and related buying, occupancy and distribution expenses |
|
|
|
284,140 |
|
|
75.4 |
% |
|
|
252,815 |
|
|
74.7 |
% |
| Gross profit |
|
|
|
92,941 |
|
|
24.6 |
% |
|
|
85,570 |
|
|
25.3 |
% |
| Selling, general and administrative expenses |
|
|
|
100,643 |
|
|
26.7 |
% |
|
|
85,368 |
|
|
25.2 |
% |
| Interest expense |
|
|
|
1,918 |
|
|
0.5 |
% |
|
|
1,192 |
|
|
0.4 |
% |
| Loss before income tax |
|
|
|
(9,620 |
) |
|
(2.6 |
)% |
|
|
(990 |
) |
|
(0.3 |
)% |
| Income tax benefit |
|
|
|
(3,362 |
) |
|
(0.9 |
)% |
|
|
(1,031 |
) |
|
(0.3 |
)% |
| Net (loss) income |
|
|
$ |
(6,258 |
) |
|
(1.7 |
)% |
|
$ |
41 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
| Basic (loss) earnings per share data: |
|
|
|
|
|
|
|
|
|
| Basic (loss) earnings per share |
|
|
$ |
(0.23 |
) |
|
|
|
$ |
— |
|
|
|
| Basic weighted average shares outstanding |
|
|
|
27,535 |
|
|
|
|
|
27,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted (loss) earnings per share data: |
|
|
|
|
|
|
|
|
|
| Diluted (loss) earnings per share |
|
|
$ |
(0.23 |
) |
|
|
|
$ |
— |
|
|
|
| Diluted weighted average shares outstanding |
|
|
|
27,535 |
|
|
|
|
|
27,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) Percentages may not foot due to rounding. |
| |
| |
|
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
|
| |
|
|
|
Six Months Ended |
|
|
|
July 29, 2017 |
|
July 30, 2016 |
|
|
|
Amount |
|
% to Sales (a) |
|
Amount |
|
% to Sales (a) |
|
|
|
|
|
|
|
|
|
|
| Net sales |
|
|
$ |
685,688 |
|
|
100.0 |
% |
|
$ |
671,135 |
|
|
100.0 |
% |
| Cost of sales and related buying, occupancy and distribution expenses |
|
|
530,529 |
|
|
77.4 |
% |
|
518,578 |
|
|
77.3 |
% |
| Gross profit |
|
|
155,159 |
|
|
22.6 |
% |
|
152,557 |
|
|
22.7 |
% |
| Selling, general and administrative expenses |
|
|
189,152 |
|
|
27.6 |
% |
|
175,512 |
|
|
26.2 |
% |
| Interest expense |
|
|
3,504 |
|
|
0.5 |
% |
|
2,221 |
|
|
0.3 |
% |
| Loss before income tax |
|
|
(37,497 |
) |
|
(5.5 |
)% |
|
(25,176 |
) |
|
(3.8 |
)% |
| Income tax benefit |
|
|
(12,252 |
) |
|
(1.8 |
)% |
|
(9,757 |
) |
|
(1.5 |
)% |
| Net loss |
|
|
$ |
(25,245 |
) |
|
(3.7 |
)% |
|
$ |
(15,419 |
) |
|
(2.3 |
)% |
|
|
|
|
|
|
|
|
|
|
| Basic loss per share data: |
|
|
|
|
|
|
|
|
|
| Basic loss per share |
|
|
$ |
(0.93 |
) |
|
|
|
$ |
(0.57 |
) |
|
|
| Basic weighted average shares outstanding |
|
|
27,401 |
|
|
|
|
27,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted loss per share data: |
|
|
|
|
|
|
|
|
|
| Diluted loss per share |
|
|
$ |
(0.93 |
) |
|
|
|
$ |
(0.57 |
) |
|
|
| Diluted weighted average shares outstanding |
|
|
27,401 |
|
|
|
|
27,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) Percentages may not foot due to rounding. |
| |
| |
|
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
|
| |
|
|
|
July 29, 2017 |
|
January 28, 2017 |
|
ASSETS
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
26,132 |
|
|
$ |
13,803 |
|
| Merchandise inventories, net |
|
|
460,405 |
|
|
409,384 |
|
| Prepaid expenses and other current assets |
|
|
62,357 |
|
|
41,574 |
|
| Total current assets |
|
|
548,894 |
|
|
464,761 |
|
|
|
|
|
|
|
| Property, equipment and leasehold improvements, net |
|
|
269,977 |
|
|
284,110 |
|
| Intangible assets |
|
|
17,135 |
|
|
15,235 |
|
| Other non-current assets, net |
|
|
23,925 |
|
|
22,883 |
|
| Total assets |
|
|
$ |
859,931 |
|
|
$ |
786,989 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
| Accounts payable |
|
|
$ |
126,904 |
|
|
$ |
101,985 |
|
| Accrued expenses and other current liabilities |
|
|
73,804 |
|
|
66,685 |
|
| Total current liabilities |
|
|
200,708 |
|
|
168,670 |
|
|
|
|
|
|
|
| Long-term debt obligations |
|
|
227,385 |
|
|
163,749 |
|
| Other long-term liabilities |
|
|
78,209 |
|
|
74,410 |
|
| Total liabilities |
|
|
506,302 |
|
|
406,829 |
|
|
|
|
|
|
|
| Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
| Common stock, par value $0.01, 100,000 shares authorized, 32,766 and 32,340 shares
issued, respectively |
|
|
328 |
|
|
323 |
|
| Additional paid-in capital |
|
|
414,524 |
|
|
410,504 |
|
| Treasury stock, at cost, 5,175 shares, respectively |
|
|
(43,210 |
) |
|
(43,286 |
) |
| Accumulated other comprehensive loss |
|
|
(5,385 |
) |
|
(5,648 |
) |
| (Accumulated deficit) retained earnings |
|
|
(12,628 |
) |
|
18,267 |
|
| Total stockholders' equity |
|
|
353,629 |
|
|
380,160 |
|
| Total liabilities and stockholders' equity |
|
|
$ |
859,931 |
|
|
$ |
786,989 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
| |
|
|
|
Six Months Ended |
|
|
|
July 29, 2017 |
|
July 30, 2016 |
| Cash flows from operating activities: |
|
|
|
|
|
| Net loss |
|
|
$ |
(25,245 |
) |
|
$ |
(15,419 |
) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
| Depreciation, amortization and impairment of long-lived assets |
|
|
33,177 |
|
|
36,508 |
|
| (Gain) loss on retirements of property, equipment and leasehold improvements |
|
|
(528 |
) |
|
124 |
|
| Deferred income taxes |
|
|
5,520 |
|
|
(1,404 |
) |
| Tax deficiency from stock-based compensation |
|
|
— |
|
|
(3,230 |
) |
| Stock-based compensation expense |
|
|
4,312 |
|
|
6,552 |
|
| Amortization of debt issuance costs |
|
|
144 |
|
|
109 |
|
| Deferred compensation obligation |
|
|
(76 |
) |
|
208 |
|
| Amortization of employee benefit related costs |
|
|
424 |
|
|
448 |
|
| Construction allowances from landlords |
|
|
1,098 |
|
|
6,290 |
|
| Other changes in operating assets and liabilities: |
|
|
|
|
|
| Increase in merchandise inventories |
|
|
(19,251 |
) |
|
(25,121 |
) |
| Increase in other assets |
|
|
(22,188 |
) |
|
(9,415 |
) |
| Increase in accounts payable and other liabilities |
|
|
30,802 |
|
|
34,069 |
|
| Net cash provided by operating activities |
|
|
8,189 |
|
|
29,719 |
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
| Additions to property, equipment and leasehold improvements |
|
|
(15,502 |
) |
|
(57,677 |
) |
| Proceeds from insurance and disposal of assets |
|
|
1,307 |
|
|
1,047 |
|
| Business acquisition |
|
|
(36,144 |
) |
|
— |
|
| Net cash used in investing activities |
|
|
(50,339 |
) |
|
(56,630 |
) |
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
| Proceeds from revolving credit facility borrowings |
|
|
277,013 |
|
|
253,095 |
|
| Payments of revolving credit facility borrowings |
|
|
(211,891 |
) |
|
(215,700 |
) |
| Proceeds from long-term debt obligation |
|
|
— |
|
|
5,830 |
|
| Payments of long-term debt obligations |
|
|
(4,850 |
) |
|
(2,785 |
) |
| Payments of debt issuance costs |
|
|
(8 |
) |
|
— |
|
| Payments for stock related compensation |
|
|
(135 |
) |
|
(817 |
) |
| Cash dividends paid |
|
|
(5,650 |
) |
|
(8,321 |
) |
| Net cash provided by financing activities |
|
|
54,479 |
|
|
31,302 |
|
| Net increase in cash and cash equivalents |
|
|
12,329 |
|
|
4,391 |
|
|
|
|
|
|
|
| Cash and cash equivalents: |
|
|
|
|
|
| Beginning of period |
|
|
13,803 |
|
|
16,487 |
|
| End of period |
|
|
$ |
26,132 |
|
|
$ |
20,878 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
|
| |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
| Net (loss) income (GAAP) |
|
|
$ |
(6,258 |
) |
|
$ |
41 |
|
|
$ |
(25,245 |
) |
|
$ |
(15,419 |
) |
| Business acquisition costs (pretax) |
|
|
2,933 |
|
|
— |
|
|
9,208 |
|
|
— |
|
| Store closures, impairments and other strategic initiatives (pretax) |
|
|
625 |
|
|
513 |
|
|
781 |
|
|
951 |
|
| Consolidation of corporate headquarters and severance charges associated with
workforce reduction (pretax) |
|
|
— |
|
|
794 |
|
|
— |
|
|
904 |
|
| Income tax impact |
|
|
(1,359 |
) |
|
(522 |
) |
|
(3,806 |
) |
|
(720 |
) |
| Adjusted net (loss) income (non-GAAP) |
|
|
$ |
(4,059 |
) |
|
$ |
826 |
|
|
$ |
(19,062 |
) |
|
$ |
(14,284 |
) |
|
|
|
|
|
|
|
|
|
|
| Diluted (loss) earnings per share (GAAP) |
|
|
$ |
(0.23 |
) |
|
$ |
— |
|
|
$ |
(0.93 |
) |
|
$ |
(0.57 |
) |
| Business acquisition costs (pretax) |
|
|
0.11 |
|
|
— |
|
|
0.34 |
|
|
— |
|
| Store closures, impairments and other strategic initiatives (pretax) |
|
|
0.02 |
|
|
0.02 |
|
|
0.03 |
|
|
0.04 |
|
| Consolidation of corporate headquarters and severance charges associated with
workforce reduction (pretax) |
|
|
— |
|
|
0.03 |
|
|
— |
|
|
0.03 |
|
| Income tax impact |
|
|
(0.05 |
) |
|
(0.02 |
) |
|
(0.14 |
) |
|
(0.03 |
) |
| Adjusted diluted (loss) earnings per share (non-GAAP) |
|
|
$ |
(0.15 |
) |
|
$ |
0.03 |
|
|
$ |
(0.70 |
) |
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
July 29, 2017 |
|
July 30, 2016 |
|
July 29, 2017 |
|
July 30, 2016 |
| Gross profit (GAAP) |
|
|
$ |
92,941 |
|
|
$ |
85,570 |
|
|
$ |
155,159 |
|
|
$ |
152,557 |
|
| Store closures and impairments |
|
|
513 |
|
|
231 |
|
|
513 |
|
|
231 |
|
| Adjusted gross profit (non-GAAP) |
|
|
$ |
93,454 |
|
|
$ |
85,801 |
|
|
$ |
155,672 |
|
|
$ |
152,788 |
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses (GAAP) |
|
|
$ |
100,643 |
|
|
$ |
85,368 |
|
|
$ |
189,152 |
|
|
$ |
175,512 |
|
| Business acquisition costs |
|
|
(2,933 |
) |
|
— |
|
|
(9,208 |
) |
|
— |
|
| Store closures and other strategic initiatives |
|
|
(112 |
) |
|
(282 |
) |
|
(268 |
) |
|
(720 |
) |
| Consolidation of corporate headquarters and severance charges associated with
workforce reduction |
|
|
— |
|
|
(794 |
) |
|
— |
|
|
(904 |
) |
| Adjusted selling, general and administrative expenses (non-GAAP) |
|
|
$ |
97,598 |
|
|
$ |
84,292 |
|
|
$ |
179,676 |
|
|
$ |
173,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands, except earnings per share)
(Unaudited)
|
| |
|
|
|
Three Months Ended |
|
|
|
July 29, 2017 |
|
July 30, 2016 |
| Loss before income tax (GAAP) |
|
|
$ |
(9,620 |
) |
|
$ |
(990 |
) |
| Business acquisition costs (pretax) |
|
|
|
2,933 |
|
|
|
— |
|
| Store closures, impairments and other strategic initiatives (pretax) |
|
|
|
625 |
|
|
|
513 |
|
| Consolidation of corporate headquarters and severance charges associated with
workforce reduction (pretax) |
|
|
|
— |
|
|
|
794 |
|
| Adjusted (loss) income before income tax (non-GAAP) |
|
|
$ |
(6,062 |
) |
|
$ |
317 |
|
|
|
|
|
|
|
| Income tax benefit (GAAP) |
|
|
$ |
(3,362 |
) |
|
$ |
(1,031 |
) |
| Income tax impact on adjustments |
|
|
|
1,359 |
|
|
$ |
522 |
|
| Adjusted income tax benefit (non-GAAP) |
|
|
$ |
(2,003 |
) |
|
$ |
(509 |
) |
|
|
|
|
|
|
| Income tax rate (GAAP) |
|
|
|
35.0 |
% |
|
|
104.2 |
% |
| Adjusted income tax rate (non-GAAP) |
|
|
|
33.1 |
% |
|
|
(160.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Guidance Range
|
|
|
|
Low |
|
High |
| Diluted loss per share (GAAP) |
|
|
$ |
(1.58 |
) |
|
$ |
(1.13 |
) |
| Business acquisition costs (pretax) |
|
|
|
0.34 |
|
|
|
0.34 |
|
| Store closures, impairments and other strategic initiatives (pretax) |
|
|
|
0.03 |
|
|
|
0.03 |
|
| Income tax impact |
|
|
|
(0.14 |
) |
|
|
(0.14 |
) |
| Adjusted diluted loss per share (non-GAAP) |
|
|
$ |
(1.35 |
) |
|
$ |
(0.90 |
) |
|
|
|
|
|
|
|
|
|
|
Stage Stores, Inc.
Randi Sonenshein, 713-331-4967
Senior Vice President, Finance and Strategy
rsonenshein@stage.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170817005329/en/