SSI
$1.81
Stage Stores
($.09)
(4.74%)
Earnings Details
2nd Quarter July 2017
Thursday, August 17, 2017 6:00:00 AM
Tweet Share Watch
Summary

Stage Stores Raises Guidance but Remains In-line with Estimates

Stage Stores (SSI) reported a 2nd Quarter July 2017 loss of $0.15 per share on revenue of $377.1 million. The consensus estimate was a loss of $0.04 per share on revenue of $374.8 million. Revenue grew 11.4% on a year-over-year basis.

The company said it expects a fiscal year loss of $1.35 to $0.90 per share. The company's previous guidance was a loss of $1.55 to $0.95 per share and the current consensus estimate is a loss of $1.01 per share for the quarter ending January 31, 2018.

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

Results
Reported Earnings
($0.15)
Earnings Whisper
-
Consensus Estimate
($0.04)
Reported Revenue
$377.1 Mil
Revenue Estimate
$374.8 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Stage Stores Reports Second Quarter Results, Raises Guidance, and Declares Quarterly Cash Dividend

Stage Stores, Inc. (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
328
323
32,340 shares issued, respectively
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
(528 )
124
improvements
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
--
794
--
904
associated with workforce reduction (pretax)
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
--
0.03
--
0.03
associated with workforce reduction (pretax)
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
--
(794 )
--
(904 )
associated with workforce reduction
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
--
794
associated with workforce reduction (pretax)
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 )

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170817005329r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170817005329/en/

SOURCE: Stage Stores, Inc.

Stage Stores, Inc.
Randi Sonenshein, 713-331-4967
Senior Vice President, Finance and Strategy
rsonenshein@stage.com