EX-99.1 2 ex99_q2earnings.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

NEWS RELEASE

CONTACT:                    
Randi Sonenshein                    
Senior Vice President, Finance and Strategy            
713-346-2430                
(rsonenshein@stagestores.com)


Stage Stores Reports Second Quarter Results and Announces a Strategic Store Closure Plan

HOUSTON, TX, August 20, 2015 - Stage Stores, Inc. (NYSE: SSI) today reported financial results for the second quarter ended August 1, 2015. Sales increased 0.9% and comparable sales increased 0.8%. On an adjusted basis, net income was $7.0 million, or $0.22 per diluted share compared to $0.35 per diluted share in the prior year.

“While we delivered a positive comp, second quarter earnings fell short of our expectation,” said Michael Glazer, President and Chief Executive Officer. “We were challenged by the impact of a weaker peso and economic softness in parts of Texas, Louisiana, Oklahoma, and New Mexico. Our earnings decline over the prior year was largely driven by a decrease in merchandise margin as we accelerated markdowns on seasonal categories. On a comparable store basis, our quarter ending inventory, excluding cosmetics, was down by 2%.”

“During the second quarter, we continued to make progress on our strategic initiatives including the expansion of our omni-channel presence, achieving direct-to-consumer growth of 21%. We are also increasing our emphasis on trends and style, improving our store environment and strengthening our connection to our customers.”

The Company also announced that, as part of a strategic evaluation of its real estate portfolio, it has launched a multi-year plan to close approximately 90 underperforming stores representing 4% of total sales.

Mr. Glazer continued, “The closure of stores should enhance our capital efficiency, deliver higher productivity and be accretive to earnings.”





2015 Guidance
The Company now expects adjusted earnings to be between $1.05 to $1.15 per diluted share, compared with previous guidance of $1.20 to $1.28 per diluted share. Comparable sales are projected to be flat, compared to the previous guidance range of flat to 2%. Weighted average diluted shares for the year are expected to be 32.5 million, and the Company anticipates a full-year tax rate of 36.6%. The Company now expects to open three new stores and close 27 store locations in fiscal 2015.

Mr. Glazer concluded, “Although we are excited for the positive benefit of our initiatives, we are reducing our full year guidance, as we expect that the macro headwinds of the first half are likely to extend to the remainder of the year. Longer term, we believe that the strategic initiatives we have in place will drive strong and consistent earnings growth and increased shareholder returns.”

Second Quarter Reported Results
Sales increased 0.9% to $380.9 million compared to $377.4 million in the prior year period. Comparable sales increased 0.8%. Net income was $1.6 million, or $0.05 per diluted share, versus $0.35 per diluted share for the prior year.

On an adjusted basis, net income was $7.0 million, or $0.22 per diluted share. Adjusted second quarter results exclude charges associated with the consolidation of the Company’s headquarters of approximately $0.6 million, or $0.01 per diluted share and impairment charges associated with the planned store closings of approximately $8.1 million, or $0.16 per diluted share.

For the year, adjusted earnings will exclude the impact of $8.7 million in year-to-date impairment charges in connection with the strategic store closures and the estimated $2.4 million in expenses associated with the previously announced corporate headquarters consolidation.

Conference Call / Webcast Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its second quarter results. Interested parties may participate in the Company’s conference call by dialing 844-368-2238. Alternatively, interested parties may listen to a live webcast of the conference call through the Investor Relations section of the Company’s website (www.stagestoresinc.com) under the “Webcasts” caption. A replay of the conference call will be available online until midnight on Friday, September 4, 2015.

About Stage Stores
Stage Stores, Inc. operates 850 specialty department stores in 40 states and a direct-to-consumer channel under the BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE nameplates. The Company’s stores, predominantly located in small towns and communities, and direct-to-consumer business offer a moderately priced, broad selection of trend-right, brand name apparel, accessories, cosmetics, footwear and home goods for the entire family. The Company’s direct-to-consumer channel includes its e-commerce website and Send program. Its e-commerce website features assortments of merchandise similar to that found in its stores, as well as products available exclusively online. The Send program allows customers in the stores to have merchandise shipped directly to their homes if the merchandise is not available in the local store. For more information about Stage Stores, visit the Company’s website at www.stagestoresinc.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
 
August 1, 2015
 
August 2, 2014
 
Amount
 
% to Sales (a)
 
Amount
 
% to Sales (a)
 

 

 

 

Net sales
$
380,916

 
100.0
%
 
$
377,446

 
100.0
%
Cost of sales and related buying, occupancy and distribution expenses
282,461

 
74.2
%
 
265,106

 
70.2
%
Gross profit
98,455

 
25.8
%
 
112,340

 
29.8
%
Selling, general and administrative expenses
95,137

 
25.0
%
 
93,108

 
24.7
%
Store opening costs
75

 
—
%
 
224

 
0.1
%
Interest expense
673

 
0.2
%
 
755

 
0.2
%
Income before income tax
2,570

 
0.7
%
 
18,253

 
4.8
%
Income tax expense
955

 
0.3
%
 
7,061

 
1.9
%
Net income
$
1,615

 
0.4
%
 
$
11,192

 
3.0
%
 
 
 
 
 
 
 
 
Basic earnings per share data:
 

 
 

 
 

 
 

Basic earnings per share
$
0.05

 
 
 
$
0.35

 
 
Basic weighted average shares outstanding
31,982

 
 
 
31,757

 
 
 
 
 
 
 
 
 
 
Diluted earnings per share data:
 
 
 
 
 
 
 
Diluted earnings per share
$
0.05

 
 
 
$
0.35

 
 
Diluted weighted average shares outstanding
32,013

 
 
 
31,825

 
 
 
 
 
 
 
 
 
 
(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 1, 2015
 
August 2, 2014
 
Amount
 
% to Sales (a)
 
Amount
 
% to Sales (a)
 
 
 
 
 
 
 
 
Net sales
$
750,229

 
100.0
 %
 
$
749,486

 
100.0
 %
Cost of sales and related buying, occupancy and distribution expenses
570,845

 
76.1
 %
 
559,205

 
74.6
 %
Gross profit
179,384

 
23.9
 %
 
190,281

 
25.4
 %
Selling, general and administrative expenses
189,308

 
25.2
 %
 
189,162

 
25.2
 %
Store opening costs
379

 
0.1
 %
 
1,032

 
0.1
 %
Interest expense
1,252

 
0.2
 %
 
1,479

 
0.2
 %
Loss before income tax
(11,555
)
 
(1.5
)%
 
(1,392
)
 
(0.2
)%
Income tax benefit
(4,533
)
 
(0.6
)%
 
(538
)
 
(0.1
)%
Loss from continuing operations before income tax
(7,022
)
 
(0.9
)%
 
(854
)
 
(0.1
)%
Loss from discontinued operations, net of tax benefit of $4,257
—

 
—
 %
 
(6,748
)
 
(0.9
)%
Net loss
$
(7,022
)
 
(0.9
)%
 
$
(7,602
)
 
(1.0
)%
 
 
 
 
 
 
 
 
Basic loss per share data:
 
 
 
 
 
 
 
Continuing operations
$
(0.22
)
 
 
 
$
(0.03
)
 
 
Discontinued operations
—

 
 
 
(0.21
)
 
 
Basic loss per share
$
(0.22
)
 
 
 
$
(0.24
)
 
 
Basic weighted average shares outstanding
31,866

 
 
 
31,624

 
 
 
 
 
 
 
 
 
 
Diluted loss per share data:
 
 
 
 
 
 
 
Continuing operations
$
(0.22
)
 
 
 
$
(0.03
)
 
 
Discontinued operations
—

 
 
 
(0.21
)
 
 
Diluted loss per share
$
(0.22
)
 
 
 
$
(0.24
)
 
 
Diluted weighted average shares outstanding
31,866

 
 
 
31,624

 
 
 
 
 
 
 
 
 
 
(a) Percentages may not foot due to rounding.
 
 
 
 
 
 






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

 
August 1, 2015
 
January 31, 2015
ASSETS

 

Cash and cash equivalents
$
24,193

 
$
17,165

Merchandise inventories, net
490,216

 
441,452

Prepaid expenses and other current assets
49,869

 
45,444

Total current assets
564,278

 
504,061

 


 


Property, equipment and leasehold improvements, net
289,378

 
285,450

Intangible asset
14,910

 
14,910

Other non-current assets, net
22,230

 
20,256

Total assets
$
890,796

 
$
824,677

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Accounts payable
$
167,597

 
$
121,778

Accrued expenses and other current liabilities
71,224

 
83,004

Total current liabilities
238,821

 
204,782

 


 


Long-term debt obligations
90,349

 
45,673

Other long-term liabilities
97,941

 
98,292

Total liabilities
427,111

 
348,747

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Common stock, par value $0.01, 100,000 shares authorized, 32,012 and 31,632 shares issued, respectively
320

 
316

Additional paid-in capital
399,093

 
395,395

Less treasury stock - at cost, 0 and 0 shares, respectively
(729
)
 
(600
)
Accumulated other comprehensive loss
(6,634
)
 
(6,874
)
Retained earnings
71,635

 
87,693

Total stockholders' equity
463,685

 
475,930

Total liabilities and stockholders' equity
$
890,796

 
$
824,677

 
 
 
 










Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Six Months Ended
 
August 1, 2015
 
August 2, 2014
Cash flows from operating activities:

 

Net loss
$
(7,022
)
 
$
(7,602
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:


 


Depreciation, amortization and impairment of long-lived assets
41,338

 
31,261

Loss on retirements of property, equipment and leasehold improvements
503

 
655

Deferred income taxes
(231
)
 
(262
)
Tax benefit from stock-based compensation
601

 
126

Stock-based compensation expense
5,929

 
4,436

Amortization of debt issuance costs
109

 
150

Excess tax benefits from stock-based compensation
(944
)
 
(826
)
Deferred compensation obligation
129

 
(112
)
Amortization of employee benefit related costs
387

 
199

Construction allowances from landlords
1,616

 
2,756

Changes in operating assets and liabilities:
 
 
 
Increase in merchandise inventories
(48,764
)
 
(17,058
)
Increase in other assets
(6,529
)
 
(8,416
)
Increase (decrease) in accounts payable and other liabilities
25,983

 
(7,396
)
Net cash provided by (used in) operating activities
13,105

 
(2,089
)
 
 
 
 
Cash flows from investing activities:
 

 
 

Additions to property, equipment and leasehold improvements
(35,572
)
 
(30,286
)
Proceeds from disposal of assets
32

 
1,448

Net cash used in investing activities
(35,540
)
 
(28,838
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from revolving credit facility borrowings
234,347

 
227,365

Payments of revolving credit facility borrowings
(192,484
)
 
(179,600
)
Payments of long-term debt obligations
(1,222
)
 
(1,412
)
Payments for stock related compensation
(3,629
)
 
(1,989
)
Proceeds from exercise of stock awards
543

 
5,040

Excess tax benefits from stock-based compensation
944

 
826

Cash dividends paid
(9,036
)
 
(7,971
)
Net cash provided by financing activities
29,463

 
42,259

Net increase in cash and cash equivalents
7,028

 
11,332

 
 
 
 
Cash and cash equivalents:
 

 
 

Beginning of period
17,165

 
14,762

End of period
$
24,193

 
$
26,094






Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)

 
Three Months Ended
 
Six Months Ended
 
August 1, 2015
 
August 2, 2014
 
August 1, 2015
 
August 2, 2014
Net income (loss) (GAAP)
$
1,615

 
$
11,192

 
$
(7,022
)
 
$
(7,602
)
Loss from discontinued operations
—

 
—

 
—

 
6,748

Income (loss) from continuing operations
1,615

 
11,192

 
(7,022
)
 
(854
)
Corporate headquarters consolidation, net of tax of $239
389

 
—

 
389

 
—

Strategic store closure plan, net of tax of $3,068 and $3,293, respectively
4,990

 
—

 
5,358

 
$
—

Adjusted earnings (loss) (non-GAAP)
$
6,994

 
$
11,192

 
$
(1,275
)
 
$
(854
)
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share (GAAP)
$
0.05

 
$
0.35

 
$
(0.22
)
 
$
(0.24
)
Loss from discontinued operations
—

 
—

 
—

 
0.21

Income (loss) from continuing operations
0.05

 
0.35

 
(0.22
)
 
(0.03
)
Corporate headquarters consolidation
0.01

 
—

 
0.01

 
—

Strategic store closure plan
0.16

 
—

 
0.17

 
$
—

Adjusted diluted earnings (loss) per share (non-GAAP)
$
0.22

 
$
0.35

 
$
(0.04
)
 
$
(0.03
)

 
Three Months Ended
 
August 1, 2015
 
August 2, 2014
 
Amount
 
% to Sales (a)
 
Amount
 
% to Sales (a)
Gross profit (GAAP)
$
98,455

 
25.8
 %
 
$
112,340

 
29.8
%
Strategic store closure plan
8,058

 
2.1
 %
 
—

 
—
%
Adjusted gross profit (non-GAAP)
$
106,513

 
28.0
 %
 
$
112,340

 
29.8
%
 
 
 
 
 
 
 
 
Selling, general and administrative expenses (GAAP)
$
95,137

 
25.0
 %
 
$
93,108

 
24.7
%
Store opening costs (GAAP)
75

 
—
 %
 
224

 
0.1
%
Interest expense (GAAP)
673

 
0.2
 %
 
755

 
0.2
%
Corporate headquarters consolidation
(628
)
 
(0.2
)%
 
—

 
—
%
Adjusted expenses (non-GAAP)
$
95,257

 
25.0
 %
 
$
94,087

 
24.9
%
 
 
 
 
 
 
 
 
(a) Percentages may not foot due to rounding.