SSI
$2.23
Stage Stores
$.05
2.29%
Earnings Details
2nd Quarter July 2019
Thursday, August 22, 2019 6:30:00 AM
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Summary

Stage Stores Lowers Revenue Guidance

Stage Stores (SSI) reported a 2nd Quarter July 2019 loss of $0.83 per share on revenue of $381.9 million.. Revenue fell 0.5% compared to the same quarter a year ago.

The company said it continues to expect a fiscal year loss of $2.25 to $2.10 per share but now expects revenue of $1.555 billion to $1.585 billion. The company's previous guidance was revenue of $1.59 billion to $1.62 billion and the current consensus estimate is a loss of $2.17 per share for the year ending January 31, 2020.

Stage Stores, Inc., operates department store and off-price stores offering apparel, accessories, cosmetics and footwear for the entire family.

Results
Reported Earnings
($0.83)
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$381.9 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Stage Stores Reports 1.8% Second Quarter Comparable Sales Increase

HOUSTON--(BUSINESS WIRE)--Stage Stores, Inc. (NYSE: SSI) today reported results for the second quarter ended August 3, 2019. For the second quarter, comparable sales increased 1.8%. Net loss was $23.9 million, and adjusted EBITDA was a loss of $0.1 million.

“Second quarter results reflect a significant milestone in the implementation of our 2019 and long-term strategies,” commented Michael Glazer, Chief Executive Officer. “Our second quarter comparable sales increase reflects a 150 basis point benefit from off-price conversions as well as stabilization of our women’s apparel business. We were excited to see that total comparable sales growth was driven by increases in both average transaction value and number of transactions. Additionally, our liquidity improved more than $10 million from the end of the first quarter, and we continue to expect positive cash flow for the full year.

We are pleased with the continued momentum in August following the 500 basis point improvement in comparable store sales in the second quarter from the first quarter. In fact, comparable sales are up mid-single digits for the first two weeks of the third quarter, which further validates our pivot from department stores to off-price.”

Michael Glazer continued, “We now expect adjusted EBITDA of $20 million to $25 million compared to the $10 million to $15 million range that we previously expected. This is based on our accelerated conversion schedule and significant SG&A benefits now expected to be realized in the fall of 2019 rather than in 2020, as originally anticipated. Our current guidance also reflects revised comparable sales outlook of +1% to +3%, based on our spring season performance. With positive comparable sales, improved liquidity, increased earnings expectations and the recently announced acceleration of our off-price conversion strategy, we believe that the future is bright for Stage Stores and we look forward to executing in the third quarter, the holiday season, and beyond.”

Second Quarter Results

Second quarter 2019 results compared to second quarter 2018 results were as follows:

  • Net sales were $368 million compared to $369 million
  • Comparable sales increased 1.8% for total company, with off-price conversions benefiting comparable sales by 150 basis points
  • Net loss was $23.9 million compared to net loss of $16.9 million
  • Loss per share was $0.83 compared to loss per share of $0.60
  • Adjusted EBITDA was $(0.1) million compared to adjusted EBITDA of $2.0 million
  • Opened one new Gordmans off-price store and converted 35 department stores to Gordmans off-price, bringing the year to date conversion total to 72

2019 Guidance

For 2019, the company provided the following annual guidance:

  • Net sales between $1,555 million and $1,585 million
  • Comparable sales increase of 1% to 3%
  • Adjusted EBITDA between $20 million and $25 million
  • Net loss between $65 million and $60 million, and tax rate of 0%
  • Loss per share between $2.25 and $2.10
  • Convert 89 department stores to Gordmans off-price stores, open one new Gordmans stores, and close 55 to 60 department stores
  • Capital expenditures of $30 million

Lease Accounting

On February 3, 2019, we adopted ASU No. 2016-02, Leases, which resulted in a significant increase in our reported assets and liabilities associated with our leases. The recognition of rent expense and payments associated with these lease assets and liabilities will not result in material differences to operating income or cash flows compared to the previous accounting rules. The adoption of the new accounting standard will not impact our credit facility covenants. The company applied the new standard prospectively with a cumulative effect charge of $5.2 million, net of tax, to the opening accumulated deficit balance in the first quarter of fiscal 2019.

Conference Call / Webcast Information

The company will post a pre-recorded conference call today at 8:30 a.m. Eastern Time to discuss its results and guidance. Interested parties may access the company’s call by dialing 866-393-5631 and providing conference ID 3293146. Alternatively, interested parties may listen to an audio webcast of the call through the Investor Relations section of the company’s website (corporate.stage.com) under the “Webcasts” caption. A replay of the call will be available online through November 4, 2019.

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 22, 2019, the company operates in 42 states through 645 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores, and 141 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 Non-GAAP / Adjusted 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 earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which are non-GAAP financial measures. A reconciliation of 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.

 

Stage Stores, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

 

August 3, 2019

 

August 4, 2018

 

 

Amount

 

% to Sales (a)

 

Amount

 

% to Sales (a)

Net sales

 

$

367,865

 

 

100.0

%

 

$

369,294

 

 

100.0

%

Credit income

 

13,988

 

 

3.8

%

 

14,305

 

 

3.9

%

Total revenues

 

381,853

 

 

103.8

%

 

383,599

 

 

103.9

%

Cost of sales and related buying, occupancy and distribution expenses

 

295,204

 

 

80.2

%

 

286,807

 

 

77.7

%

Selling, general and administrative expenses

 

106,310

 

 

28.9

%

 

110,914

 

 

30.0

%

Interest expense

 

4,123

 

 

1.1

%

 

2,650

 

 

0.7

%

Loss before income tax

 

(23,784

)

 

(6.5

)%

 

(16,772

)

 

(4.5

)%

Income tax expense

 

150

 

 

%

 

150

 

 

%

Net loss

 

$

(23,934

)

 

(6.5

)%

 

$

(16,922

)

 

(4.6

)%

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.83

)

 

 

 

$

(0.60

)

 

 

Diluted

 

$

(0.83

)

 

 

 

$

(0.60

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

28,791

 

 

 

 

28,152

 

 

 

Diluted

 

28,791

 

 

 

 

28,152

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

August 3, 2019

 

August 4, 2018

 

 

Amount

 

% to Sales (a)

 

Amount

 

% to Sales (a)

Net sales

 

$

695,586

 

 

100.0

%

 

$

713,523

 

 

100.0

%

Credit income

 

27,096

 

 

3.9

%

 

29,819

 

 

4.2

%

Total revenues

 

722,682

 

 

103.9

%

 

743,342

 

 

104.2

%

Cost of sales and related buying, occupancy and distribution expenses

 

572,803

 

 

82.3

%

 

568,548

 

 

79.7

%

Selling, general and administrative expenses

 

212,886

 

 

30.6

%

 

218,191

 

 

30.6

%

Interest expense

 

8,117

 

 

1.2

%

 

4,903

 

 

0.7

%

Loss before income tax

 

(71,124

)

 

(10.2

)%

 

(48,300

)

 

(6.8

)%

Income tax expense

 

300

 

 

%

 

300

 

 

%

Net loss

 

$

(71,424

)

 

(10.3

)%

 

$

(48,600

)

 

(6.8

)%

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(2.50

)

 

 

 

$

(1.74

)

 

 

Diluted

 

$

(2.50

)

 

 

 

$

(1.74

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

28,616

 

 

 

 

27,959

 

 

 

Diluted

 

28,616

 

 

 

 

27,959

 

 

 

 

 

 

 

 

 

 

 

 

(a) Percentages may not foot due to rounding.

 

 

 

 

 

 

 

Stage Stores, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)

 

August 3, 2019

 

February 2, 2019

 

August 4, 2018

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

25,418

 

 

$

15,830

 

 

$

26,573

 

Merchandise inventories, net

499,001

 

 

424,555

 

 

476,883

 

Prepaid expenses and other current assets

50,138

 

 

52,518

 

 

48,525

 

Total current assets

574,557

 

 

492,903

 

 

551,981

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

201,928

 

 

224,803

 

 

236,151

 

Operating lease assets

321,982

 

 

 

 

 

Intangible assets

2,225

 

 

2,225

 

 

17,135

 

Other non-current assets, net

21,354

 

 

24,230

 

 

24,409

 

Total assets

$

1,122,046

 

 

$

744,161

 

 

$

829,676

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Accounts payable

$

155,865

 

 

$

106,825

 

 

$

122,680

 

Current portion of debt obligations

5,000

 

 

4,812

 

 

3,542

 

Current portion of operating lease liabilities

74,906

 

 

 

 

 

Accrued expenses and other current liabilities

76,455

 

 

65,715

 

 

73,506

 

Total current liabilities

312,226

 

 

177,352

 

 

199,728

 

 

 

 

 

 

 

Long-term debt obligations

318,775

 

 

250,294

 

 

268,682

 

Long-term operating lease liabilities

279,009

 

 

 

 

 

Other long-term liabilities

32,213

 

 

61,990

 

 

65,431

 

Total liabilities

942,223

 

 

489,636

 

 

533,841

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01, 100,000 shares authorized, 34,052, 33,469 and 33,418 shares issued, respectively

341

 

 

335

 

 

334

 

Additional paid-in capital

425,033

 

 

423,535

 

 

421,621

 

Treasury stock, at cost, 5,175 shares, respectively

(43,546

)

 

(43,579

)

 

(43,388

)

Accumulated other comprehensive loss

(5,485

)

 

(5,857

)

 

(4,823

)

Accumulated deficit

(196,520

)

 

(119,909

)

 

(77,909

)

Total stockholders' equity

179,823

 

 

254,525

 

 

295,835

 

Total liabilities and stockholders' equity

$

1,122,046

 

 

$

744,161

 

 

$

829,676

 

 

 

 

 

 

 

 

Stage Stores, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Six Months Ended

 

 

August 3, 2019

 

August 4, 2018

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(71,424

)

 

$

(48,600

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization of long-lived assets

 

29,872

 

 

30,147

 

Impairment of long-lived assets

 

1,615

 

 

1,070

 

(Gain) loss on retirements of property, equipment and leasehold improvements

 

(678

)

 

17

 

Non-cash operating lease expense

 

34,919

 

 

 

Stock-based compensation expense

 

1,585

 

 

3,049

 

Dividends charged to compensation expense

 

21

 

 

 

Amortization of debt issuance costs

 

341

 

 

148

 

Deferred compensation obligation

 

(33

)

 

90

 

Amortization of employee benefit related costs

 

372

 

 

354

 

Construction allowances from landlords

 

3,553

 

 

757

 

Other changes in operating assets and liabilities:

 

 

 

 

Increase in merchandise inventories

 

(74,446

)

 

(38,506

)

Decrease in other assets

 

8,464

 

 

2,412

 

Decrease in operating lease liabilities

 

(37,601

)

 

 

Increase (decrease) in accounts payable and other liabilities

 

61,788

 

 

(19,958

)

Net cash used in operating activities

 

(41,652

)

 

(69,020

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Additions to property, equipment and leasehold improvements

 

(18,610

)

 

(12,822

)

Proceeds from insurance and disposal of assets

 

678

 

 

1,802

 

Net cash used in investing activities

 

(17,932

)

 

(11,020

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from revolving credit facility borrowings

 

257,426

 

 

298,509

 

Payments of revolving credit facility borrowings

 

(186,445

)

 

(233,148

)

Proceeds from long-term debt obligation

 

 

 

25,000

 

Payments of long-term debt obligations

 

(1,758

)

 

(1,472

)

Payments of debt issuance costs

 

(36

)

 

(354

)

Payments for stock related compensation

 

(15

)

 

(260

)

Cash dividends paid

 

 

 

(2,912

)

Net cash provided by financing activities

 

69,172

 

 

85,363

 

Net increase in cash and cash equivalents

 

9,588

 

 

5,323

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

Beginning of period

 

15,830

 

 

21,250

 

End of period

 

$

25,418

 

 

$

26,573

 

 

Stage Stores, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

 

The following tables reconcile earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, non-GAAP financial measures, to the most directly comparable GAAP measure, net loss (amounts in thousands):

 

 

Three Months Ended

 

Six Months Ended

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

Net loss (GAAP)

$

(23,934

)

 

$

(16,922

)

 

$

(71,424

)

 

$

(48,600

)

Interest expense

4,123

 

 

2,650

 

 

8,117

 

 

4,903

 

Income tax expense

150

 

 

150

 

 

300

 

 

300

 

Depreciation and amortization

14,528

 

 

14,997

 

 

29,872

 

 

30,147

 

EBITDA (non-GAAP)

(5,133

)

 

875

 

 

(33,135

)

 

(13,250

)

Impairment of long-lived assets

1,096

 

 

1,070

 

 

1,615

 

 

1,070

 

Severance

1,467

 

 

72

 

 

2,503

 

 

119

 

Pre-opening expenses

1,295

 

 

 

 

2,897

 

 

 

Store closing services

1,178

 

 

 

 

1,178

 

 

 

Adjusted EBITDA (non-GAAP)

$

(97

)

 

$

2,017

 

 

$

(24,942

)

 

$

(12,061

)

Fiscal 2019 guidance range (amounts in millions):

 

Fiscal 2019

 

Low

 

High

Net loss (GAAP)

$

(65

)

 

$

(60

)

Interest expense

16

 

 

16

 

Income tax expense

1

 

 

1

 

Depreciation and amortization

58

 

 

58

 

EBITDA (non-GAAP)

10

 

 

15

 

Impairments, severance, pre-opening and store closing services

10

 

 

10

 

Adjusted EBITDA (non-GAAP)

$

20

 

 

$

25

 

 

Jean Fontana
646-277-1214
(Jean.Fontana@icrinc.com)

Source: Stage Stores, Inc.