8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 23, 2018

(Date of Report, Date of Earliest Event Reported)

Stage Stores, Inc.

(Exact Name of Registrant as Specified in Charter)

1-14035

(Commission File Number)

NEVADA (State or Other Jurisdiction of Incorporation)	91-1826900 (I.R.S. Employer Identification No.)
2425 West Loop South, Houston, Texas (Address of Principal Executive Offices)	77027 (Zip Code)

(800) 579-2302

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02Results of Operations and Financial Condition

On August 23, 2018 Stage Stores, Inc. (“we,” “us,” “our” or “registrant”) issued a news release reporting our unaudited financial results for the second quarter of fiscal 2018 and updating our guidance for fiscal 2018. The news release provided information regarding earnings (loss) before interest and taxes (EBIT) and earnings (loss) before interest, taxes, depreciation and amortization (EBITDA), which are “non-GAAP financial measures,” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). The news release posted in the Investor Relations section of our website contains a presentation of the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and a reconciliation of each such non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP. We believe the presentation of these non-GAAP financial measures enhances an investor’s understanding of our financial performance. In addition, management uses these non-GAAP financial measures to assess the results of our operations. Non-GAAP financial information should not be considered in isolation or viewed as a substitute for net income, cash flow from operations or other measures of performance as defined by GAAP. Moreover, non-GAAP financial information as reported by us is not necessarily comparable to other similarly titled measures of other companies due to the potential inconsistencies in the method of presentation and items considered.

Attached as Exhibit 99 to this Form 8-K is a copy of the news release, including information concerning forward-looking statements and factors that may affect our future results. The information in Exhibit 99 shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such filing. By furnishing the information in this Form 8-K and the attached exhibit, we are making no admission as to the materiality of any information in this Form 8-K or the exhibit.

Item 8.01    Other Events.

In our news release issued on August 23, 2018, we also announced that our Board of Directors declared a quarterly cash dividend of $0.05 per share on our common stock, payable on September 19, 2018 to shareholders of record at the close of business on September 4, 2018.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

99 Stage Stores, Inc. news release dated August 23, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	STAGE STORES, INC.
Date: August 27, 2018	/s/ Jason T. Curtis
	Jason T. Curtis
	Senior Vice President,
	Interim Chief Financial Officer and Treasurer

EX-99

EXHIBIT 99

NEWS RELEASE

CONTACT:

Jean Fontana

646-277-1214

(Jean.Fontana@icrinc.com)

Stage Stores Reports Second Quarter Results

and Updates Guidance

HOUSTON, TX, August 23, 2018 - Stage Stores, Inc. (NYSE: SSI) today reported results for the second quarter ended August 4, 2018, and updated guidance for fiscal year 2018. For the second quarter, comparable sales decreased 0.2%. Loss before income tax was $16.8 million compared to a loss before income tax of $9.6 million in the second quarter 2017, driven by investments in the growth of the off-price business, additional supply chain costs, and increased promotional markdowns.

“Our comparable sales results for the second quarter reflected a sequential improvement of 260 basis points versus the first quarter,” commented Michael Glazer, President and Chief Executive Officer. “While our department store business was challenged in the middle of the quarter, we saw comparable sales increase in late July. Gordmans comparable sales increased 11% during the second quarter, and we are particularly encouraged by the momentum created by our back-to-school business that began late in the quarter. We continue to be pleased with inventory content and levels, with department store inventory lower than last year, and normalized inventory in Gordmans.”

Mr. Glazer continued, “Looking ahead, many of our underlying first half trends provide optimism for the back half of the year, including our growing off-price business, trending non-apparel categories which will make great holiday gifts, and strong momentum in our e-commerce business which is the most highly penetrated in the fourth quarter. As a result, we anticipate 2018 EBITDA will increase 40% versus 2017 at the middle of our updated guidance range. In addition, we are pleased to have ended the second quarter with $95 million in excess availability, including the impact of our recent credit facility amendment, which illustrates the strong relationship we have with our bank partners.”

The company also announced that its Board of Directors declared a quarterly cash dividend of $0.05 per share on its common stock, payable on September 19, 2018 to shareholders of record at the close of business on September 4, 2018.

Second Quarter Results

Second quarter 2018 results compared to second quarter 2017 results were as follows:

• Net sales were $369 million compared to $377 million

• Comparable sales decreased 0.2% for the total company, decreased 2.2% for department stores, and increased 11.4% for Gordmans off-price stores

• Net loss was $16.9 million compared to a net loss of $6.3 million

• Loss per share was $0.60 compared to a loss per share of $0.23

• EBIT was $(14.1) million compared to $(7.7) million

2018 Guidance

For fiscal 2018, the company reaffirmed the following guidance:

• Net sales between $1,610 million and $1,640 million

• Comparable sales of flat to an increase of 2.0%

• Depreciation and amortization between $55 million and $60 million

• Capital expenditures of $30 million to $35 million

For fiscal 2018, the company updated the following guidance:

• Net loss of between $41 million and $34 million

• Tax rate of 0%, which, when compared to 2017, is expected to negatively impact 2018 EPS by $0.30 to $0.35 per diluted share, or net loss by $8 million to $10 million

• Loss per diluted share between $1.45 and $1.20

• EBIT between $(29) million and $(22) million

• EBITDA between $26 million and $38 million

• Opening one new Gordmans off-price store, converting nine department stores to Gordmans off-price stores, and closing 30 to 40 department stores

Revenue Recognition

During the first quarter of 2018, the company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).  As a result of the adoption, the condensed consolidated statements of operations reflect the reclassification of credit income related to the company’s private label credit card program from selling, general and administrative expenses to revenue. The condensed consolidated balance sheets and condensed consolidated statements of cash flows reflect the reclassification of the asset for the right to recover sales return merchandise from merchandise inventories to prepaid expenses and other current assets. The company adopted the standard using the full retrospective method, and the condensed consolidated statements of operations, balance sheets and cash flows for the prior year periods have been restated.

Conference Call / Webcast Information

The company will post a pre-recorded conference call today at 8:30 a.m. Eastern Time to discuss its results and guidance. Interested parties may access the company’s call by dialing 866-393-5631 and providing conference ID 7298454. Alternatively, interested parties may listen to an audio webcast of the call through the Investor Relations section of the company’s website (corporate.stage.com) under the “Webcasts” caption. A replay of the call will be available online through September 27, 2018.

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 23, 2018, the company operates in 42 states through 764 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores and 63 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 Non-GAAP / Adjusted 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 earnings (loss) before interest and taxes (“EBIT”) and earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), which are non-GAAP financial measures. A reconciliation of 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 4, 2018					July 29, 2017
						As Adjusted
	Amount			% to Sales (a)		Amount			% to Sales (a)
Net sales	$	369,294		100.0	%	$	377,081		100.0	%
Credit income	14,305			3.9	%	13,190			3.5	%
Total revenues	383,599			103.9	%	390,271			103.5	%
Cost of sales and related buying, occupancy and distribution expenses	286,807			77.7	%	284,140			75.4	%
Selling, general and administrative expenses	110,914			30.0	%	113,833			30.2	%
Interest expense	2,650			0.7	%	1,918			0.5	%
Loss before income tax	(16,772		)	(4.5	)%	(9,620		)	(2.6	)%
Income tax expense (benefit)	150			—	%	(3,362		)	(0.9	)%
Net loss	$	(16,922	)	(4.6	)%	$	(6,258	)	(1.7	)%
Loss per share
Basic	$	(0.60	)			$	(0.23	)
Diluted	$	(0.60	)			$	(0.23	)
Weighted average shares outstanding
Basic	28,152					27,535
Diluted	28,152					27,535
(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 4, 2018					July 29, 2017
						As Adjusted
	Amount			% to Sales (a)		Amount			% to Sales (a)
Net sales	$	713,523		100.0	%	$	685,688		100.0	%
Credit income	29,819			4.2	%	26,118			3.8	%
Total revenues	743,342			104.2	%	711,806			103.8	%
Cost of sales and related buying, occupancy and distribution expenses	568,548			79.7	%	530,529			77.4	%
Selling, general and administrative expenses	218,191			30.6	%	215,270			31.4	%
Interest expense	4,903			0.7	%	3,504			0.5	%
Loss before income tax	(48,300		)	(6.8	)%	(37,497		)	(5.5	)%
Income tax expense (benefit)	300			—	%	(12,252		)	(1.8	)%
Net loss	$	(48,600	)	(6.8	)%	$	(25,245	)	(3.7	)%
Loss per share
Basic	$	(1.74	)			$	(0.93	)
Diluted	$	(1.74	)			$	(0.93	)
Weighted average shares outstanding
Basic	27,959					27,401
Diluted	27,959					27,401
(a)Percentages may not foot due to rounding.

Stage Stores, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)

				February 3, 2018			July 29, 2017
	August 4, 2018			As Adjusted			As Adjusted
ASSETS
Cash and cash equivalents	$	26,573		$	21,250		$	26,132
Merchandise inventories, net	476,883			438,377			458,319
Prepaid expenses and other current assets	48,525			52,407			64,443
Total current assets	551,981			512,034			548,894
Property, equipment and leasehold improvements, net	236,151			252,788			269,977
Intangible assets	17,135			17,135			17,135
Other non-current assets, net	24,409			24,449			23,925
Total assets	$	829,676		$	806,406		$	859,931
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	122,680		$	145,991		$	126,904
Current portion of debt obligations	3,542			2,985			3,050
Accrued expenses and other current liabilities	73,506			64,442			70,754
Total current liabilities	199,728			213,418			200,708
Long-term debt obligations	268,682			180,350			227,385
Other long-term liabilities	65,431			68,524			78,209
Total liabilities	533,841			462,292			506,302
Commitments and contingencies
Common stock, par value $0.01, 100,000 shares authorized, 33,418, 32,806 and 32,766 shares issued, respectively	334			328			328
Additional paid-in capital	421,621			418,658			414,524
Treasury stock, at cost, 5,175 shares, respectively	(43,388		)	(43,298		)	(43,210		)
Accumulated other comprehensive loss	(4,823		)	(5,177		)	(5,385		)
Accumulated deficit	(77,909		)	(26,397		)	(12,628		)
Total stockholders' equity	295,835			344,114			353,629
Total liabilities and stockholders' equity	$	829,676		$	806,406		$	859,931

Stage Stores, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended
	August 4, 2018			July 29, 2017
				As Adjusted
Cash flows from operating activities:
Net loss	$	(48,600	)	$	(25,245	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, amortization and impairment of long-lived assets	31,217			33,177
Loss (gain) on retirements of property, equipment and leasehold improvements	17			(528		)
Deferred income taxes	—			5,520
Stock-based compensation expense	3,049			4,312
Amortization of debt issuance costs	148			144
Deferred compensation obligation	90			(76		)
Amortization of employee benefit related costs	354			424
Construction allowances from landlords	757			1,098
Other changes in operating assets and liabilities:
Increase in merchandise inventories	(38,506		)	(18,199		)
Decrease (increase) in other assets	2,412			(23,240		)
(Decrease) increase in accounts payable and other liabilities	(19,958		)	30,802
Net cash (used in) provided by operating activities	(69,020		)	8,189
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements	(12,822		)	(15,502		)
Proceeds from insurance and disposal of assets	1,802			1,307
Business acquisition	—			(36,144		)
Net cash used in investing activities	(11,020		)	(50,339		)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	298,509			277,013
Payments of revolving credit facility borrowings	(233,148		)	(211,891		)
Proceeds from long-term debt obligation	25,000			—
Payments of long-term debt obligations	(1,472		)	(4,850		)
Payments of debt issuance costs	(354		)	(8		)
Payments for stock related compensation	(260		)	(135		)
Cash dividends paid	(2,912		)	(5,650		)
Net cash provided by financing activities	85,363			54,479
Net increase in cash and cash equivalents	5,323			12,329
Cash and cash equivalents:
Beginning of period	21,250			13,803
End of period	$	26,573		$	26,132

Stage Stores, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

The following table reconciles earnings (loss) before interest and taxes (“EBIT”), which is a non-GAAP financial measure, to the most directly comparable GAAP measure, net loss (amounts in thousands):

	Three Months Ended						Six Months Ended
	August 4, 2018			July 29, 2017			August 4, 2018			July 29, 2017
Net loss (GAAP)	$	(16,922	)	$	(6,258	)	$	(48,600	)	$	(25,245	)
Interest expense	2,650			1,918			4,903			3,504
Income tax expense (benefit)	150			(3,362		)	300			(12,252		)
EBIT (non-GAAP)	$	(14,122	)	$	(7,702	)	$	(43,397	)	$	(33,993	)

The following table reconciles EBIT and earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), non-GAAP financial measures, to the most directly comparable GAAP measure, net loss (amounts in millions):

	2018 Guidance Range
	Low			High			2017
Net loss (GAAP)	$	(41	)	$	(34	)	$	(37	)
Interest expense	11			11			7
Income tax expense (benefit)	1			1			(13		)
EBIT (non-GAAP)	$	(29	)	$	(22	)	$	(43	)
Depreciation and amortization	55			60			66
EBITDA (non-GAAP)	$	26		$	38		$	23