Stage Stores, Inc. (NYSE: SSI) today reported financial results
for the second quarter ended July 30, 2016 and affirmed guidance
for the fiscal year.
“Our second quarter results were hurt by a challenging retail
environment and continued regional pressure from depressed oil
prices and the weak peso. That said, we are pleased with our flat
merchandise margins, rigorous expense controls, and strong
inventory management,” said Michael Glazer, President and Chief
Executive Officer. “While we anticipate the macro headwinds will
continue, we expect the impact on our business to lessen as we
anniversary the sluggish business that started late in the third
quarter of last year. We are intensely focused on generating
positive cash flow and continue to manage our business for the long
term by investing in our stores, growing our omnichannel business,
and delivering value to our shareholders through our dividend.”
The Company announced that its Board of Directors has declared a
quarterly cash dividend of 15 cents per share on the Company’s
common stock, payable on September 14, 2016 to shareholders of
record at the close of business on August 30, 2016.
Second Quarter Reported
Results
For the second quarter, comparable sales decreased 9.8%. Total
sales decreased 11.2% to $338.4 million, as compared to $380.9
million in the prior year. Net income was $0.04 million, or $0.00
per diluted share, versus $0.05 per diluted share for the prior
year.
On an adjusted basis, net income was $0.8 million, or $0.03 per
diluted share versus $0.22 per diluted share in the prior year.
Adjusted second quarter results excluded charges related to
severance associated with workforce reductions and strategic store
closures of approximately $0.8 million, or $0.03 per diluted
share.
2016 Guidance
The Company affirmed its fiscal year guidance of comparable
sales of -6% to -4% and adjusted earnings per diluted share of
$0.20 to $0.40. Weighted average diluted shares for the year are
expected to be 28.2 million.
Capital expenditures in 2016, net of construction allowances
from landlords, are expected to be approximately $65 million,
compared to $87 million in 2015.
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 2, 2016.
About Stage
Stores
Stage Stores, Inc. operates 821 specialty department stores in
38 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.
Stage Stores, Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended July 30, 2016 August 1, 2015
Amount % to Sales (a) Amount % to Sales (a)
Net sales $ 338,385 100.0 % $ 380,916 100.0 % Cost of sales and
related buying, occupancy and distribution expenses 252,815
74.7 % 282,461 74.2 % Gross profit 85,570 25.3 %
98,455 25.8 % Selling, general and administrative expenses 85,368
25.2 % 95,212 25.0 % Interest expense 1,192 0.4 % 673
0.2 % Income (loss) before income tax (990 ) (0.3
)
%
2,570 0.7 % Income tax expense (benefit) (1,031 ) (0.3
)
%
955 0.3 % Net income $ 41 — % $ 1,615
0.4 % Basic earnings per share data: Basic earnings per
share $ — $ 0.05 Basic weighted average shares
outstanding 27,111 31,982 Diluted earnings per
share data: Diluted earnings per share $ — $ 0.05
Diluted weighted average shares outstanding 27,175 32,013
(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 July 30, 2016 August 1, 2015 Amount
% to Sales (a) Amount % to Sales (a) Net sales
$ 671,135 100.0 % $ 750,229 100.0 % Cost of sales and related
buying, occupancy and distribution expenses 518,578 77.3
% 570,845 76.1 % Gross profit 152,557 22.7 %
179,384 23.9 % Selling, general and administrative expenses 175,512
26.2 % 189,687 25.3 % Interest expense 2,221 0.3 %
1,252 0.2 % Loss before income tax (25,176 ) (3.8
)
%
(11,555 ) (1.5
)
%
Income tax benefit (9,757 ) (1.5
)
%
(4,533 ) (0.6
)
%
Net loss $ (15,419 ) (2.3
)
%
$ (7,022 ) (0.9
)
%
Basic loss per share data: Basic loss per share $ (0.57 ) $
(0.22 ) Basic weighted average shares outstanding 27,021
31,866 Diluted loss per share data: Diluted loss per
share $ (0.57 ) $ (0.22 ) Diluted weighted average shares
outstanding 27,021 31,866 (a) Percentages may
not foot due to rounding.
Stage Stores, Inc.
Condensed Consolidated Balance
Sheets
(in thousands, except par value)
(Unaudited)
July 30, 2016 January 30, 2016
ASSETS
Cash and cash equivalents $ 20,878 $ 16,487 Merchandise
inventories, net 461,117 435,996 Prepaid expenses and other current
assets 50,026 48,279 Total current assets 532,021
500,762 Property, equipment and leasehold improvements, net
324,144 311,717 Intangible assets 15,235 15,235 Other non-current
assets, net 23,337 20,385 Total assets $ 894,737
$ 848,099
LIABILITIES AND STOCKHOLDERS'
EQUITY Accounts payable $ 117,741 $ 84,019 Accrued expenses
and other current liabilities 69,215 71,863 Total
current liabilities 186,956 155,882 Long-term debt
obligations 199,838 162,876 Other long-term liabilities 98,939
99,588 Total liabilities 485,733 418,346
Commitments and contingencies Common stock,
par value $0.01, 100,000 shares authorized, 32,325 and 32,030
shares issued, respectively 323 320 Additional paid-in capital
408,952 406,034 Treasury stock, at cost, 5,175 shares, respectively
(43,276 ) (43,068 ) Accumulated other comprehensive loss (6,075 )
(6,353 ) Retained earnings 49,080 72,820 Total
stockholders' equity 409,004 429,753 Total
liabilities and stockholders' equity $ 894,737 $ 848,099
Stage Stores, Inc.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended July 30, 2016 August 1, 2015 Cash
flows from operating activities: Net loss $ (15,419 ) $ (7,022 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation, amortization and impairment of long-lived
assets 36,508 41,338 Loss on retirements of property, equipment and
leasehold improvements 124 503 Deferred income taxes (1,404 ) (231
) Tax (deficiency) benefit from stock-based compensation (3,230 )
601 Stock-based compensation expense 6,552 5,929 Amortization of
debt issuance costs 109 109 Excess tax benefits from stock-based
compensation — (944 ) Deferred compensation obligation 208 129
Amortization of employee benefit related costs 448 387 Construction
allowances from landlords 6,290 1,616 Other changes in operating
assets and liabilities: Increase in merchandise inventories (25,121
) (48,764 ) Increase in other assets (9,415 ) (6,529 ) Increase in
accounts payable and other liabilities 34,069 25,983
Net cash provided by operating activities 29,719 13,105
Cash flows from investing activities: Additions to
property, equipment and leasehold improvements (57,677 ) (35,572 )
Proceeds from disposal of assets 1,047 32 Net cash
used in investing activities (56,630 ) (35,540 ) Cash flows
from financing activities: Proceeds from revolving credit facility
borrowings 253,095 234,347 Payments of revolving credit facility
borrowings (215,700 ) (192,484 ) Proceeds from long-term debt
obligation 5,830 — Payments of long-term debt obligations (2,785 )
(1,222 ) Payments for stock related compensation (817 ) (3,629 )
Proceeds from issuance of stock awards — 543 Excess tax benefits
from stock-based compensation — 944 Cash dividends paid (8,321 )
(9,036 ) Net cash provided by financing activities 31,302
29,463 Net increase in cash and cash equivalents 4,391 7,028
Cash and cash equivalents: Beginning of period 16,487
17,165 End of period $ 20,878 $ 24,193
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(in thousands, except earnings per
share)
(Unaudited)
Three Months Ended Six Months Ended July 30, 2016
August 1, 2015 July 30, 2016 August 1, 2015 Net income
(loss) (GAAP) $ 41 $ 1,615 $ (15,419 ) $ (7,022 ) Consolidation of
corporate headquarters, net of tax of $3, $239, $43 and $239,
respectively (3 ) 389 67 389 Severance charges associated with
workforce reduction, net of tax of $308, respectively 486 — 486 —
Strategic store closures and other initiatives, net of tax of $211,
$3,068, $369 and $3,293, respectively 302 4,990 582
5,358 Adjusted net income (loss) (non-GAAP) $ 826
$ 6,994 $ (14,284 ) $ (1,275 ) Diluted
earnings (loss) per share (GAAP) $ — $ 0.05 $ (0.57 ) $ (0.22 )
Consolidation of corporate headquarters — 0.01 — 0.01 Severance
charges associated with workforce reduction 0.02 — 0.02 — Strategic
store closures and other initiatives 0.01 0.16 0.02
0.17 Adjusted diluted earnings (loss) per share
(non-GAAP) $ 0.03 $ 0.22 $ (0.53 ) $ (0.04 )
Three Months Ended
July 30, 2016 August 1, 2015 Amount % to Sales (a) Amount % to
Sales (a) Gross Profit (GAAP) $ 85,570 25.3 % $ 98,455 25.8 %
Strategic store closures 231 — % 8,058 2.1
% Adjusted gross profit (non-GAAP) $ 85,801 25.4
% $ 106,513 28.0 % Selling, general and
administrative expenses (GAAP) $ 85,368 25.2 % $ 95,212 25.0 %
Consolidation of corporate headquarters — — % (628 ) (0.2
)
%
Severance charges associated with workforce reduction (794 ) (0.2
)
%
— — % Strategic store closures (282 ) (0.1
)
%
— — % Adjusted selling, general and administrative
expenses (non-GAAP) $ 84,292 24.9 % $ 94,584
24.8 % (a) Percentages may not foot due to rounding.
2016 Guidance Range Low High Diluted earnings per share
(GAAP) $ 0.15 - $ 0.35 Consolidation of corporate headquarters,
severance charges associated with workforce reduction and strategic
store closures 0.05 - 0.05 Adjusted diluted earnings per
share (non-GAAP) $ 0.20 - $ 0.40
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version on businesswire.com: http://www.businesswire.com/news/home/20160818005294/en/
Stage Stores, Inc.Randi Sonenshein, 713-331-4967Senior Vice
President, Finance and Strategyrsonenshein@stagestores.com
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