EX-99.1 3 nr_3q03er.htm

Exhibit 99.1

NEWS RELEASE

CONTACT:

Bob Aronson
Director of Investor Relations
(800) 579-2302
(baronson@stagestores.com)

FOR IMMEDIATE RELEASE

STAGE STORES ANNOUNCES THIRD QUARTER RESULTS

HOUSTON, TX, November 20, 2003 -- Stage Stores, Inc. (Nasdaq: STGS) today reported that net income for the third quarter ended November 1, 2003 was $12.9 million, or $0.63 per diluted share, compared to $10.2 million, or $0.50 per diluted share, for the prior year third quarter ended November 2, 2002. This year's third quarter results includes an after tax net gain of $7.8 million, or $0.38 per diluted share, related to the sale of the Company's private label credit card portfolio, and an after tax charge of $0.5 million to interest expense due to the write-off of unamortized debt issue costs associated with the termination of the Company's former senior secured revolving credit facility.

Total sales for the 13-week period decreased 3.2% to $197.9 million from $204.4 million last year. Comparable store sales decreased 7.1% during the quarter.

In addition to reporting its third quarter financial results, the Company highlighted the following major third quarter events:

  • Signed a definitive agreement to acquire Peebles Inc. on October 7th, and completed the acquisition on November 4th. As such, the Company's results for the third quarter do not include any operating results from Peebles.

  • Sold its private label credit card portfolio to a subsidiary of Alliance Data Systems Corporation on September 12th and began a long-term strategic relationship with them. Concurrent with the closing of the transaction, the Company paid off the outstanding balance under its securitization facility.

  • Authorized a $50 million Stock Repurchase Program on October 1st.

  • Replaced its previous $125 million revolving credit facility with a new $175 million revolving credit facility, and on November 4th, further increased its credit facility commitment to $250 million in connection with the Peebles acquisition.

  • Opened 13 new stores.

  • Introduced Polo by Ralph Lauren with an initial 25 store test.

 

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Stage Stores Announces
Third Quarter Results

Page - 2

Commenting on the third quarter's performance, Jim Scarborough, Chairman, President and Chief Executive Officer, stated, "We are enthusiastic and pleased with the strategic progress that we made at Stage during the third quarter. We believe the sale of our credit operations, and the acquisition of Peebles, position our Company for significant future sales and earnings growth, greatly expands our geographic presence, improves our competitive position, enhances our financial flexibility, and will result in stronger returns for our shareholders in the future."

Mr. Scarborough continued, "Although our sales during the quarter were lower than anticipated, our earnings came in at the high end of our previously provided range. As we enter the fourth quarter, our merchandise content is fresher and more current than last year, and our inventory is at appropriate levels. We believe we are well positioned for the holiday shopping season, with great selections and assortments of the preferred brands that we believe will have the greatest appeal for our customers."

Net income for the nine-month period ended November 1, 2003 was $35.4 million, or $1.77 per diluted share, compared to $38.3 million, or $1.80 per diluted share, in the prior year period. Total sales for the 39-week period decreased 2.4% to $603.7 million from $618.6 million last year. Comparable store sales decreased 6.0% versus the same 39-week period last year.

Conference Call Information

The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss the third quarter's results. All interested parties can listen to a live web cast of the Company's conference call by logging on to the Company's web site at www.stagestoresinc.com and then clicking on Investor Relations, then Webcasts, then the web cast link. As an alternative, individual investors and other interested parties can listen to the conference call web cast by logging on to www.fulldisclosure.com, while institutional investors, who are members, can access the call through www.streetevents.com. A replay of the conference call will be available online at each web site until midnight on November 28, 2003.

Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small towns and communities through 522 stores located in 27 states. The Company operates under the Stage, Bealls and Palais Royal names throughout the South Central states, and under the Peebles name throughout the Mid-Atlantic, Southeastern and Midwestern states. For more information about Stage Stores, visit the Company's web site at www.stagestoresinc.com.

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Stage Stores Announces
Third Quarter Results

Page - 3

 

"Safe Harbor" Statement

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including comments regarding delivering stronger returns to shareholders and the Company's belief that it is well positioned for the upcoming holiday shopping period. The Company intends forward looking terminology such as "believes", "expects", "may", "will", "should", "could", "anticipates", "plans" or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause the Company's 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 the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC") on April 23, 2003, in the Company's Quarterly Reports on Form 10-Q as filed with the SEC and other factors as may periodically be described in other Company filings with the SEC.

(Tables to Follow)

 

 

 

Stage Stores, Inc.
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
   
 

Thirteen Weeks Ended

 

November 1, 2003

November 2, 2002
  Amount % to Sales   Amount % to Sales
           
Net sales $ 197,949 100.0%   $ 204,420 100.0%
Cost of sales and related buying, occupancy and distribution expenses 142,719 72.1%   147,422 72.1%
Gross profit 55,230 27.9%   56,998 27.9%
Selling, general and administrative expenses 45,376 22.9%   40,006 19.6%
Store opening costs 818 0.4%   400 0.2%
Interest, net 928 0.5%   377 0.2%
Gain on sale of proprietary credit card portfolio, net (12,218) -6.2%   - 0.0%
Income before income tax 20,326 10.3%   16,215 7.9%
Income tax expense 7,419 3.7%   6,000 2.9%
Net income $ 12,907 6.5%   $ 10,215 5.0%
           
Earnings per common share data:          
Basic earnings per common share

$ 0.68

   

$ 0.53

 
Basic weighted average common shares outstanding

19,007

   

19,362

           
Diluted earnings per common share

$ 0.63

   

$ 0.50

 
Diluted weighted average common shares outstanding

20,489

   

20,289

 

 

 

 

Stage Stores, Inc.
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
   
 

Thirty-Nine Weeks Ended

 

November 1, 2003

November 2, 2002
  Amount % to Sales   Amount % to Sales
           
Net sales $ 603,657 100.0%   $ 618,624 100.0%
Cost of sales and related buying, occupancy and distribution expenses 427,602 70.8%   427,139 69.0%
Gross profit 176,055 29.2%   191,485 31.0%
Selling, general and administrative expenses 129,194 21.4%   128,514 20.8%
Store opening costs 1,574 0.3%   808 0.1%
Interest, net 1,736 0.3%   1,316 0.2%
Gain on sale of proprietary credit card portfolio, net (12,218) -2.0%   - 0.0%
Income before income tax 55,769 9.2%   60,847 9.8%
Income tax expense 20,356 3.4%   22,514 3.6%
Net income $ 35,413 5.9%   $ 38,333 6.2%
           
Earnings per common share data:          
Basic earnings per common share

$ 1.87

   

$ 1.94

 
Basic weighted average common shares outstanding

18,930

   

19,762

           
Diluted earnings per common share

$ 1.77

   

$ 1.80

 
Diluted weighted average common shares outstanding

20,037

   

21,308

 

 

 

 

Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
 
 

November 1, 2003

  

February 1, 2003
  (unaudited)    
ASSETS      
Cash and cash equivalents $ 170,990   $ 20,886
Retained interest in receivables sold -   127,547
Accounts receivable, net -   11,023
Merchandise inventories, net 248,485   179,922
Current deferred tax assets 14,315   21,280
Prepaid expenses and other current assets

18,719

 

17,625

   Total current assets 452,509   378,283
       
Property, equipment and leasehold improvements, net 139,690   135,846
Deferred tax assets 12,493   12,016
Other non-current assets

9,045

 

6,624

   Total assets

$ 613,737

 

$ 532,769

       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $ 81,130   $ 56,286
Income taxes payable 8,617   3,805
Current portion of long-term debt 200   210
Accrued expenses and other current liabilities

42,316

 

44,496

   Total current liabilities 132,263   104,797
       
Long-term debt 482   672
Other long-term liabilities

29,962

 

15,183

   Total liabilities

162,707

 

120,652

       
Commitments and contingencies      
       
Common stock, par value $0.01, 50,000 shares authorized,      
   20,278 and 20,042 shares issued and outstanding, respectively 203   200
Additional paid-in capital 366,564   363,067
Less treasury stock - at cost (1,169 shares in 2003 and 2002) (25,461)   (25,461)
Retained earnings 111,744   76,331
Minimum pension liability adjustment

(2,020)

  

(2,020)
   Stockholders' equity

451,030

 

412,117

   Total liabilities and stockholders' equity

$ 613,737

 

$ 532,769

 

 

 

 

Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Thirty-Nine   Thirty-Nine
  Weeks Ended   Weeks Ended
 

November 1, 2003

  

November 2, 2002
Cash flows from operating activities:      
   Net income

$ 35,413

 

$ 38,333

   Adjustments to reconcile net income to net cash      
   provided by operating activities:      
      Gain on sale of proprietary credit card portfolio, net (12,218)   -
      Depreciation and amortization 16,337   12,989
      Amortization of debt issue costs 1,615   1,059
      Provision for bad debts 15,938   24,232
      Deferred income taxes 6,488   9,873
      Proceeds from sale of proprietary credit card portfolio, net 158,200   -
   Changes in operating assets and liabilities:      
      Decrease in accounts receivable and retained interest in receivables sold 42,090   5,044
      Increase in merchandise inventories (68,563)   (42,612)
      Increase in other assets (3,955)   (5,054)
      Increase in accounts payable and other liabilities

42,255

 

5,088

         Total adjustments

198,187

 

10,619

      Net cash provided by operating activities

233,600

 

48,952

       
Cash flows from investing activities:      
   Additions to property, equipment and leasehold improvements (21,565)   (37,214)
   Proceeds from retirement of fixtures and equipment

500

 

272

      Net cash used in investing activities

(21,065)

  

(36,942)
       
Cash flows from financing activities:      
Proceeds from (payments on):      
   Accounts receivable securitization borrowings (64,000)   3,000
   Long-term debt (200)   (188)
   Exercise of stock options 3,500   373
   Repurchase of common stock -   (21,446)
   Additions to debt issue cost

(1,731)

  

(100)
      Net cash used in financing activities

(62,431)

  

(18,361)
Net increase (decrease) in cash and cash equivalents 150,104   (6,351)
Cash and cash equivalents:      
   Beginning of period

20,886

 

22,679

   End of period

$ 170,990

 

$ 16,328

Supplemental disclosures:      
Interest paid

$ 733

 

$ 688

Income taxes paid

$ 9,056

 

$ 5,680