EX-99 3 ex99_q1er.htm STAGE STORES INC., FORM 8-K, 5-22-2008, EX 99
Exhibit 99
NEWS RELEASE

CONTACT:
Bob Aronson
Vice President, Investor Relations
800-579-2302
(baronson@stagestores.com)


FOR IMMEDIATE RELEASE

Stage Stores Announces First Quarter Results

Provides Second Quarter, Second Half and Updated Full Year Guidance

HOUSTON, TX, May 22, 2008 -- Stage Stores, Inc. (NYSE: SSI) today reported net income for the first quarter ended May 3, 2008 of $2.3 million, or $0.06 per diluted share.  Last year’s net income, excluding a non-comparable gain of $1.7 million, or $0.04 per diluted share, related to the March 2004 sale of the Peebles private label credit card portfolio, was $7.4 million, or $0.16 per diluted share.

As previously reported by the Company, total sales for the first quarter were $353.5 million versus $358.2 million for the same period last year.  Comparable store sales for the quarter decreased 5.4% versus an increase of 0.1% in the prior year.

Jim Scarborough, Chairman and Chief Executive Officer, commented, “Our first quarter results are a reflection of the currently challenging economic and retail environment.  Ongoing price increases for gasoline and groceries, continuing turmoil in the housing market, and job uncertainty clearly dampened the mood of the consumer, leading to the shortfall in our first quarter sales and earnings vs. last year.

“We are proud of the way that our associates have responded to these challenges during these uncertain economic times by carefully managing inventory levels and expenses, while continuing to provide exceptional service to our customers.  As a result of our tightened inventory management practices, we ended the quarter with inventories on a comparable store basis down 4.8% compared to last year’s levels.


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Stage Stores Reports
First Quarter Results
Page - 2


“During the quarter, we made progress on a number of our strategic initiatives.  We opened 23 new stores, relocated 5 stores, and expanded 2 stores.  We also completed the installation of 17 new Estee Lauder counters and 14 new Clinique counters.  Our efforts to grow our cosmetics business yielded positive results as this category achieved a comparable store sales increase of 12.9% during the period.

“As we enter the second quarter, we believe that our inventories are at appropriate levels and we are pleased with our merchandise assortments.  We plan to open 5 new stores during the quarter, 2 of which will be in Idaho, our 36th state.  We also plan to complete the installation of 6 additional Estee Lauder and 2 additional Clinique counters.  Lastly, we look forward to the July opening of our third distribution center, which is located in Jeffersonville, Ohio. This new distribution facility will play an important role in supporting our ongoing unit growth and geographic expansion,” Mr. Scarborough concluded.


FISCAL 2008 - SECOND QUARTER, SECOND HALF AND UPDATED FULL YEAR GUIDANCE

Commenting on the Company’s outlook, Mr. Scarborough stated, “Certainly, for the near term, we believe that consumers will continue to face economic headwinds, and as a result, we are projecting that our comparable store sales will be down between 3.0% and 5.0% during the second quarter.  Based upon easier year-over-year sales comparisons, we currently forecast that our comparable store sales will be down in the range of 1.0% to 3.0% during the second half of the year.”

2nd Quarter 2008:

   
2Q 2008 OUTLOOK
    
2Q 2007 ACTUAL
  
Sales ($mm)
    
$360
  
-
    
$368
 
    
$359.2
  
               
 
          
Net Income ($mm)
    
$6.5
  
-
    
$8.9
 
    
$9.9
  
               
 
          
Diluted EPS
    
$0.17
  
-
    
$0.23
      
$0.23
  
                           
Diluted Shares (m)
    
38,925
      
43,373
  


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Stage Stores Reports
First Quarter Results
Page - 3


2nd Half 2008:

   
2H 2008 OUTLOOK
    
2H 2007 ACTUAL
  
Sales ($mm)
     $852  
-
     $870       $828.2  
                           
Net Income ($mm)
     $31.7  
-
     $37.1       $34.1  
                           
Diluted EPS
     $0.81  
-
     $0.95       $0.82  
                           
Diluted Shares (m)
    
 39,040
       41,360  


FY 2008:

   
FY 2008 OUTLOOK
    
FY 2007 ACTUAL
  
Sales ($mm)
     $1,566  
-
     $1,591       $1,545.6  
                           
Net Income ($mm)
     $40.5  
-
     $48.2       $53.1  
                           
Diluted EPS
     $1.04  
-
     $1.24       $1.24  
                           
Diluted Shares (m)
    
38,960
       42,720  

 
·
FY 2007 results include a non-comparable gain of $0.04 per diluted share related to the March 2004 sale of the Peebles private label credit card portfolio.


Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its first quarter results.  Interested parties can participate in the Company’s conference call by dialing 703-639-1173.  Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestores.com and then clicking on Investor Relations, then Webcasts, then the webcast link.  A replay of the conference call will be available online until midnight on Friday, May 30, 2008.


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Stage Stores Reports
First Quarter Results
Page - 4


About Stage Stores

Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns and communities through 717 stores located in 35 states.  The Company operates under the Bealls, Palais Royal and Stage names throughout the South Central and Southwestern states, and under the Peebles name throughout the Midwestern, Southeastern, Mid-Atlantic and New England states.  For more information about Stage Stores, visit the Company’s web site at www.stagestores.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 sales and earnings outlook for the second quarter and second half of the 2008 fiscal year, as well as for the full 2008 fiscal year.  Forward-looking statements also include comments regarding the number of stores that the Company plans to open, and the number of Estee Lauder and Clinique counters that the Company intends to install, in the second quarter of the 2008 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 April 1, 2008 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)

 
 
 
 
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(Unaudited)

   
Thirteen Weeks Ended
  
   
May 3, 2008
    
May 5, 2007
  
   
Amount
    
% to Sales (1)
    
Amount
    
% to Sales (1)
  
                         
Net sales
   $ 353,536       100.0 %   $ 358,244       100.0 %
Cost of sales and related buying, occupancy and distribution expenses
     257,938       73.0 %     259,919       72.6 %
Gross profit
     95,598       27.0 %     98,325       27.4 %
Selling, general and administrative expenses
     88,339       25.0 %     82,288       23.0 %
Store opening costs
     2,308       0.7 %     755       0.2 %
Interest expense, net of income of $5 and $0, respectively
     1,301       0.4 %     769       0.2 %
Income before income tax
     3,650       1.0 %     14,513       4.1 %
Income tax expense
     1,387       0.4 %     5,406       1.5 %
Net income
   $ 2,263       0.6 %   $ 9,107       2.5 %
                                 
Basic and diluted earnings per share data:
                                
Basic earnings per share
   $ 0.06             $ 0.21          
Basic weighted average shares outstanding
     38,243               43,507          
                                 
Diluted earnings per share
   $ 0.06             $ 0.20          
Diluted weighted average shares outstanding
     38,919               44,790          

(1) Percentages may not foot due to rounding.

 
 
 
 
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(Unaudited)
 
   
May 3, 2008
    
February 2, 2008
  
             
ASSETS
            
Cash and cash equivalents
   $ 21,165     $ 17,028  
Merchandise inventories, net
     381,458       342,622  
Current deferred taxes
     28       32  
Prepaid expenses and other current assets
     26,921       43,557  
Total current assets
     429,572       403,239  
                 
Property, equipment and leasehold improvements, net
     339,389       329,709  
Goodwill
     95,374       95,374  
Intangible asset
     14,910       14,910  
Other non-current assets, net
     27,865       28,258  
Total assets
   $ 907,110     $ 871,490  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Accounts payable
   $ 117,546     $ 94,505  
Current portion of debt obligations
     6,250       6,158  
Accrued expenses and other current liabilities
     64,390       66,538  
Total current liabilities
     188,186       167,201  
                 
Debt obligations
     100,691       94,436  
Other long-term liabilities
     93,978       89,007  
Total liabilities
     382,855       350,644  
                 
Commitments and contingencies
                
                 
Common stock, par value $0.01, 100,100 shares authorized,55,227 and 55,113 shares issued, respectively
     552       551  
Additional paid-in capital
     483,480       479,960  
Less treasury stock - at cost, 16,907 and 16,907 shares, respectively
     (278,167 )     (277,691 )
Accumulated other comprehensive loss
     (1,766 )     (1,766 )
Retained earnings
     320,156       319,792  
Stockholders' equity
     524,255       520,846  
Total liabilities and stockholders' equity
   $ 907,110     $ 871,490  

 
 
 
 
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
   
Thirteen Weeks Ended
  
   
May 3, 2008
    
May 5, 2007
  
             
Cash flows from operating activities:
            
Net income
   $ 2,263     $ 9,107  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     13,239       11,546  
Deferred income taxes
     (498 )     (520 )
Stock-based compensation tax benefits
     725       3,448  
Stock-based compensation expense
     1,821       1,521  
Amortization of debt issue costs
     60       100  
Excess tax benefits from stock-based compensation
     (431 )     (3,400 )
Deferred compensation
     324       -  
Construction allowances from landlords
     6,732       2,786  
Changes in operating assets and liabilities:
                
Increase in merchandise inventories
     (38,836 )     (34,174 )
Decrease in other assets
     17,414       18,217  
Increase in accounts payable and other liabilities
     23,588       8,909  
Total adjustments
     24,138       8,433  
Net cash provided by operating activities
     26,401       17,540  
                 
Cash flows from investing activities:
                
Additions to property, equipment and leasehold improvements
     (27,307 )     (17,888 )
Proceeds from sale of property and equipment
     -       31  
Net cash used in investing activities
     (27,307 )     (17,857 )
                 
Cash flows from financing activities:
                
Proceeds from (payments on):
                
Borrowings under revolving credit facility, net
     7,852       8,365  
Repurchases of common stock
     (476 )     (9,283 )
Debt obligations
     (1,505 )     (20 )
Exercise of stock options and stock appreciation rights
     651       4,567  
Excess tax benefits from stock-based compensation
     431       3,400  
Cash dividends
     (1,910 )     (2,172 )
Net cash provided by financing activities
     5,043       4,857  
Net increase in cash and cash equivalents
     4,137       4,540  
                 
Cash and cash equivalents:
                
Beginning of period
     17,028       15,866  
End of period
   $ 21,165     $ 20,406