EX-99 3 ex99_q409errel.htm STAGE STORES, INC., FORM 8K, 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 Fourth Quarter and Fiscal 2009 Results
Fourth Quarter Net Income Increased 9.9%
Fourth Quarter EPS of $0.72 Exceeds Guidance Range

HOUSTON, TX, March 9, 2010 -- Stage Stores, Inc. (NYSE: SSI) today reported net income for the fourth quarter ended January 30, 2010 of $27.9 million, or $0.72 per diluted share, compared to net income of $25.3 million, or $0.67 per diluted share, for the prior year fourth quarter ended January 31, 2009.

For the 2009 fiscal year, the Company reported net income of $28.7 million, or $0.75 per diluted share, compared to a net loss of $65.5 million, or $(1.71) per share, for the 2008 fiscal year.  Last year’s results include a non-cash goodwill impairment charge of $95.4 million, or $2.49 per share.  Excluding the impairment charge, the Company’s net income for the 2008 fiscal year was $29.8 million, or $0.77 per diluted share.

Andy Hall, President and Chief Executive Officer, commented, “We are pleased with our fourth quarter results, in which we delivered a 9.9% increase in net income and diluted earnings per share above our guidance range.  The improved performance was once again driven by strong inventory control and expense management.  In the quarter, gross margin increased 180 basis points and SG&A expenses declined $2.1 million, despite operating 19 additional stores.  Gross profit benefited from lower clearance levels, reduced freight expense and improved physical inventory results, while the reduction in SG&A expenses reflects our continued disciplined approach to managing costs.

“We are also pleased that we were able to drive 2009 diluted earnings per share to within two cents of last year’s results in a year in which our customers were negatively impacted by the recession.  The 2009 performance was achieved by strengthening our gross profit rate by 40 basis points and reducing SG&A expenses by $12.7 million.  Our balance sheet remains in great shape.  We ended the year with no borrowings on our $250 million credit facility and $67 million more cash than last year.  Total debt obligations were $6 million lower than last year.  EBITDA for the fiscal year was $114 million and free cash
 

--more--
 
Stage Stores Announces
Fourth Quarter Results
Page - 2


flow, which we define as net cash provided by operating activities less capital expenditures, at $78 million, was our highest in five years.

“Operationally during the fiscal year, we opened 27 new stores, relocated 10 stores and expanded 3 others.  We purchased the Goody’s name through their bankruptcy auction and branded 15 of our new and relocated stores with the Goody’s nameplate.  We also increased our market share in those markets that used to overlap with a Goody’s store.  We added 12 Estee Lauder and 11 Clinique counters, which included 8 combination bays.  We completed our North/South store realignment, consolidated responsibility for all aspects of our nationwide cosmetics business, successfully rolled out a new POS software platform and completed the development of our markdown optimization tool for piloting and full roll-out in 2010.  It took a great team effort from our 13,000 associates to accomplish so much in 2009.”

 Mr. Hall concluded, “We are proud of the fact that we met our objectives and enter 2010 a stronger company than when we began 2009.  We have confidence and momentum as we embark on our 2010 goals of growth in sales, earnings and store count.”

Fiscal 2010 - First Quarter and Full Year Projections
Commenting on the Company’s projections, Mr. Hall stated, “While we believe that 2010 will be another challenging year, we are nonetheless projecting growth in sales, operating margin and diluted earnings per share.  We are planning to open 30 – 35 new stores and we expect to spend $40 - $45 million in net capital expenditures.

“For the first quarter, we are projecting comparable store sales to be in a range of down 2.0% to flat.  Within the quarter, we expect comparable store sales for March to be up mid single digits and for April to be down low to mid single digits, both of which reflect the Easter shift.”

1st Quarter 2010:
   
1Q 2010 OUTLOOK
  
1Q 2009 ACTUAL
Sales ($mm)
  
$332
-
$339
  
$334
             
Diluted EPS
  
$(0.02)
-
$0.02
  
$(0.02)
             
Diluted Shares (m)
  
38,600
  
37,930
 
 
--more--
 
Stage Stores Announces
Fourth Quarter Results
Page - 3


Mr. Hall continued, “For the fiscal year, we are projecting comparable store sales to be in a range of down 1.0% to up 1.0%.”

FY 2010:
   
FY 2010 OUTLOOK
  
FY 2009 ACTUAL
Sales ($mm)
  
$1,442
-
$1,470
  
$1,432
             
Diluted EPS
  
$0.80
-
$0.90
  
 $0.75
             
Diluted Shares (m)
  
38,700
  
 38,413

 
Conference Call Information
The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter results.  Interested parties can participate in the Company’s conference call by dialing 703-639-1157.  Alternatively, interested parties can listen to a live webcast of the 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 webcast link.  A replay of the conference call will be available online until midnight on Friday, March 19, 2010.

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 758 stores located in 39 states.  The Company operates its stores under the five names of Bealls, Goody’s, Palais Royal, Peebles and Stage.  For more information about Stage Stores, visit the Company’s web site at www.stagestoresinc.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 number of stores that the Company plans to open in fiscal 2010.  Forward-looking statements also include comments regarding the Company’s outlook for comparable store sales in March and April.  Forward-looking statements also include comments regarding the Company’s sales, earnings and diluted share count projections for the first quarter of the 2010 fiscal year and full 2010 fiscal year, as well as comments regarding the estimated amount of capital expenditures for the full 2010 fiscal year.
 

 
--more--
 
Stage Stores Announces
Fourth Quarter Results
Page - 4


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 March 30, 2009, 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)
 
 
 

Stage Stores, Inc.
  
Condensed Consolidated Statements of Operations
  
(in thousands, except earnings per share)
  
(Unaudited)
  
                         
   
Thirteen Weeks Ended
   
January 30, 2010
    
January 31, 2009
  
   
Amount
    
% to Sales (1)
    
Amount
    
% to Sales (1)
  
                         
Net sales
   $ 431,680       100.0 %   $ 455,821       100.0 %
Cost of sales and related buying, occupancy
                                
     and distribution expenses
     298,101       69.1 %     323,113       70.9 %
Gross profit
     133,579       30.9 %     132,708       29.1 %
Selling, general and administrative expenses
     87,869       20.4 %     89,969       19.7 %
Store opening costs
     216       0.1 %     600       0.1 %
Interest expense, net of income of $19 and $12, respectively
     1,010       0.2 %     1,329       0.3 %
Income before income tax
     44,484       10.3 %     40,810       9.0 %
Income tax expense
     16,632       3.9 %     15,475       3.4 %
Net income
   $ 27,852       6.5 %   $ 25,335       5.6 %
                                 
Basic and diluted earnings per share data:
                                
Basic earnings per share
   $ 0.73             $ 0.67          
Basic weighted average shares outstanding
     38,033               37,951          
                                 
Diluted earnings per share
   $ 0.72             $ 0.67          
Diluted weighted average shares outstanding
     38,446               37,994          
                                 
                                 
                                 
(1) Percentages may not foot due to rounding.
                                
                                 
 
 
 
Stage Stores, Inc.
  
Condensed Consolidated Statements of Operations
  
(in thousands, except earnings per share)
  
(Unaudited)
  
                         
   
Fifty-Two Weeks Ended
  
   
January 30, 2010
    
January 31, 2009
  
   
Amount
    
% to Sales (1)
    
Amount
    
% to Sales (1)
  
                         
Net sales
   $ 1,431,927       100.0 %   $ 1,515,820       100.0 %
Cost of sales and related buying, occupancy
                                
     and distribution expenses
     1,040,120       72.6 %     1,106,236       73.0 %
Gross profit
     391,807       27.4 %     409,584       27.0 %
Selling, general and administrative expenses
     338,551       23.6 %     351,246       23.2 %
Store opening costs
     3,041       0.2 %     6,479       0.4 %
Goodwill impairment
     -       0.0 %     95,374       6.3 %
Interest expense, net of income of $96 and $23, respectively
     4,388       0.3 %     5,216       0.3 %
Income (loss) before income tax
     45,827       3.2 %     (48,731 )     -3.2 %
Income tax expense
     17,106       1.2 %     16,804       1.1 %
Net income (loss)
   $ 28,721       2.0 %   $ (65,535 )     -4.3 %
                                 
Basic and diluted earnings (loss) per share data:
                                
Basic earnings (loss) per share
   $ 0.76             $ (1.71 )        
Basic weighted average shares outstanding
     38,029               38,285          
                                 
Diluted earnings (loss) per share
   $ 0.75             $ (1.71 )        
Diluted weighted average shares outstanding
     38,413               38,285          
                                 
                                 
Supplemental Information
                                
                                 
Net income (loss):
                                
On a U.S. GAAP basis
   $ 28,721             $ (65,535 )        
Goodwill impairment
     -               95,374          
On a non-GAAP basis
   $ 28,721             $ 29,839          
                                 
Diluted earnings (loss) per share:
                                
On a U.S. GAAP basis
   $ 0.75             $ (1.71 )        
Goodwill impairment
     -               2.49          
On a non-GAAP basis
   $ 0.75             $ 0.77          
                                 
                                 
(1) Percentages may not foot due to rounding.
                                
 
 
 
Stage Stores, Inc.
  
Condensed Consolidated Balance Sheets
  
(in thousands, except par value)
  
(Unaudited)
  
             
   
January 30, 2010
    
January 31, 2009
  
             
ASSETS
            
Cash and cash equivalents
   $ 93,714     $ 26,278  
Merchandise inventories, net
     306,360       314,517  
Current deferred taxes
     2,535       385  
Prepaid expenses and other current assets
     24,560       30,439  
Total current assets
     427,169       371,619  
                 
Property, equipment and leasehold improvements, net
     342,001       367,135  
Intangible asset
     14,910       14,910  
Other non-current assets, net
     16,351       14,379  
Total assets
   $ 800,431     $ 768,043  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Accounts payable
   $ 100,602     $ 97,760  
Income taxes payable
     12,752       639  
Current portion of debt obligations
     12,726       11,161  
Accrued expenses and other current liabilities
     56,936       60,088  
Total current liabilities
     183,016       169,648  
                 
Long-term debt obligations
     38,492       45,851  
Deferred taxes
     11,899       8,208  
Other long-term liabilities
     90,978       94,333  
Total liabilities
     324,385       318,040  
                 
Commitments and contingencies
                
                 
Common stock, par value $0.01, 100,000 shares authorized,
                
56,080 and 55,849 shares issued, respectively
     561       558  
Additional paid-in capital
     501,800       494,765  
Less treasury stock - at cost, 18,071 and 17,986 shares, respectively
     (288,079 )     (286,751 )
Accumulated other comprehensive loss
     (5,897 )     (5,138 )
Retained earnings
     267,661       246,569  
Total stockholders' equity
     476,046       450,003  
Total liabilities and stockholders' equity
   $ 800,431     $ 768,043  
                 

 
 
 
Stage Stores, Inc.
  
Condensed Consolidated Statements of Cash Flows
  
(in thousands)
  
(Unaudited)
  
             
             
   
Fifty-Two Weeks Ended
  
   
January 30, 2010
    
January 31, 2009
  
             
Cash flows from operating activities:
            
Net income (loss)
   $ 28,721     $ (65,535 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
          
Depreciation, amortization and leasehold impairments
     63,459       58,985  
Gain on insurance proceeds related to property, equipment and leasehold improvements
     (1,460 )     -  
Goodwill impairment
     -       95,374  
Deferred income taxes
     2,443       11,419  
Tax (deficiency) benefits from stock-based compensation
     (872 )     1,356  
Stock-based compensation expense
     6,659       7,671  
Amortization of debt issuance costs
     290       263  
Excess tax benefits from stock-based compensation
     (136 )     (2,207 )
Deferred compensation obligation
     121       494  
Amortization of employee benefit related costs
     520       -  
Construction allowances from landlords
     3,875       17,536  
Other changes in operating assets and liabilities:
                
Decrease in merchandise inventories
     8,157       28,105  
Decrease in other assets
     1,938       25,319  
Increase (decrease) in accounts payable and other liabilities
     7,221       (15,997 )
Total adjustments
     92,215       228,318  
Net cash provided by operating activities
     120,936       162,783  
                 
Cash flows from investing activities:
                
Additions to property, equipment and leasehold improvements
     (42,707 )     (99,841 )
Proceeds from insurance and retirements of property, equipment
                
and leasehold improvements
     2,954       3  
Net cash used in investing activities
     (39,753 )     (99,838 )
                 
Cash flows from financing activities:
                
Proceeds from revolving credit facility borrowings
     139,278       445,685  
Payments of revolving credit facility borrowings
     (139,278 )     (509,189 )
Proceeds from long-term debt obligations
     5,585       27,486  
Payments of long-term debt obligations
     (11,379 )     (7,564 )
Payments of debt issuance costs
     (40 )     (248 )
Repurchases of common stock
     (1,327 )     (9,060 )
Proceeds from exercise of stock options and stock appreciation rights
     907       4,687  
Excess tax benefits from stock-based compensation
     136       2,207  
Cash dividends paid
     (7,629 )     (7,699 )
Net cash used in financing activities
     (13,747 )     (53,695 )
Net increase in cash and cash equivalents
     67,436       9,250  
                 
Cash and cash equivalents:
                
Beginning of period
     26,278       17,028  
End of period
   $ 93,714     $ 26,278