Stage Stores, Inc. (NYSE:SSI) today reported financial results
for the second quarter ended July 29, 2017. For the second quarter,
comparable sales were down 3.6%. The net loss for the quarter was
$6.3 million, or a $0.23 loss per diluted share. On an adjusted
basis, the second quarter net loss was $4.1 million, or $0.15 per
diluted share.
“We are pleased to have gained momentum in our business during
the second quarter, with sequential improvement that culminated
with comparable sales turning positive in July,” said Michael
Glazer, President and Chief Executive Officer. “Several encouraging
trends have emerged that contributed to our 600 basis point
comparable sales improvement from the first quarter of this year.
Notably, our stores in the four energy states, which include the
border stores and account for more than 50% of our comparable
sales, outperformed the balance of the chain. Our
direct-to-consumer business grew double digits and our non-apparel
categories had a positive quarterly comp increase.
“As we continue to integrate our new off-price Gordmans business
into the Stage infrastructure, we are excited to see the
overwhelming support from the vendor community,” continued Mr.
Glazer. “Our work to date, along with the compelling merchandise
value in the marketplace, furthers our strong prospects for the
growth of this business.
“Looking ahead to the Fall season, we remain disciplined in
managing expenses and inventory. We feel great about our inventory
position, which is down 7% in our department stores. Based on our
improved performance, we are raising guidance for the fiscal year.
We are managing our business for the long term with a focus on
generating positive free cash flow and delivering value to our
shareholders through the dividend.”
The Company also announced that its Board of Directors has
declared a quarterly cash dividend of $0.05 cents per share on the
Company’s common stock, payable on September 13, 2017 to
shareholders of record at the close of business on August 29,
2017.
Second Quarter Reported
Results
For the second quarter, comparable sales decreased 3.6%. Total
sales increased 11.4% to $377.1 million, as compared to $338.4
million in the prior year. Net loss was $6.3 million, or $0.23 per
diluted share, versus $0.04 million, or $0.00 per diluted share,
for the prior year.
On an adjusted basis, second quarter net loss was $4.1 million,
or $0.15 per diluted share, versus net income of $0.8 million, or
$0.03 per diluted share, in the prior year. Adjusted second quarter
2017 results exclude after-tax charges related to the Gordmans
acquisition and other store closures of approximately $2.2 million,
or $0.08 per diluted share. The prior year’s adjusted second
quarter results exclude after-tax charges related to severance
associated with workforce reductions and strategic store closures
of approximately $0.8 million, or $0.03 per diluted share.
2017 Guidance
The Company is raising its guidance for 2017. Adjusted loss per
diluted share is now expected to be between $0.90 and $1.35,
compared to the prior guidance of an adjusted loss of $0.95 to
$1.55. Updated 2017 guidance assumes comparable sales are in a
range of -4% to -7%, excludes after-tax charges associated with the
Gordmans acquisition, and store closures and other strategic
initiatives totaling approximately $0.23 per diluted share.
Weighted average shares for the year are expected to be
approximately 27.5 million. The effective tax rate is projected to
be between 32% and 34%.
Capital expenditures in 2017, net of construction allowances
from landlords, are expected to be $40 million, compared to $67
million in 2016.
Conference Call / Webcast
Information
The Company will hold a conference call today at 8:30 a.m.
Eastern Time to discuss its results. Interested parties may
participate in the Company’s conference call by dialing
844-415-6993. Alternatively, interested parties may listen to a
live webcast of the conference call through the Investor Relations
section of the Company’s website (corporate.stage.com) under the “Webcasts” caption.
A replay of the conference call will be available online until
midnight on Friday, September 1, 2017.
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 17, 2017, the Company operates in 42
states through 793 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE
specialty department stores and 58 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 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 July 29, 2017 July
30, 2016 Amount % to Sales (a) Amount % to Sales (a)
Net sales $ 377,081 100.0 % $ 338,385 100.0 % Cost of sales
and related buying, occupancy and distribution expenses
284,140 75.4 % 252,815 74.7 % Gross profit
92,941 24.6 % 85,570 25.3 % Selling, general and administrative
expenses 100,643 26.7 % 85,368 25.2 % Interest expense 1,918
0.5 % 1,192 0.4 % Loss before income tax
(9,620 ) (2.6 )% (990 ) (0.3 )% Income tax benefit (3,362 )
(0.9 )% (1,031 ) (0.3 )% Net (loss) income $ (6,258 ) (1.7
)% $ 41 — % Basic (loss) earnings per share data:
Basic (loss) earnings per share $ (0.23 ) $ — Basic weighted
average shares outstanding 27,535 27,111
Diluted (loss) earnings per share data: Diluted
(loss) earnings per share $ (0.23 ) $ — Diluted weighted
average shares outstanding 27,535 27,175
(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 29, 2017 July 30,
2016 Amount % to Sales (a) Amount % to Sales (a)
Net sales $ 685,688 100.0 % $ 671,135 100.0 % Cost of sales
and related buying, occupancy and distribution expenses 530,529
77.4 % 518,578 77.3 % Gross profit 155,159 22.6 %
152,557 22.7 % Selling, general and administrative expenses 189,152
27.6 % 175,512 26.2 % Interest expense 3,504 0.5 % 2,221
0.3 % Loss before income tax (37,497 ) (5.5 )% (25,176 )
(3.8 )% Income tax benefit (12,252 ) (1.8 )% (9,757 ) (1.5 )% Net
loss $ (25,245 ) (3.7 )% $ (15,419 ) (2.3 )% Basic loss per
share data: Basic loss per share $ (0.93 ) $ (0.57 ) Basic weighted
average shares outstanding 27,401 27,021
Diluted loss per share data: Diluted loss per share $ (0.93 ) $
(0.57 ) Diluted weighted average shares outstanding 27,401
27,021 (a) Percentages may not foot due to rounding.
Stage Stores, Inc.Condensed
Consolidated Balance Sheets(in thousands, except par
value)(Unaudited)
July 29, 2017 January 28, 2017
ASSETS
Cash and cash equivalents $ 26,132 $ 13,803 Merchandise
inventories, net 460,405 409,384 Prepaid expenses and other current
assets 62,357 41,574 Total current assets 548,894
464,761 Property, equipment and leasehold improvements, net
269,977 284,110 Intangible assets 17,135 15,235 Other non-current
assets, net 23,925 22,883 Total assets $ 859,931
$ 786,989
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 126,904 $ 101,985 Accrued expenses and other
current liabilities 73,804 66,685 Total current
liabilities 200,708 168,670 Long-term debt obligations
227,385 163,749 Other long-term liabilities 78,209 74,410
Total liabilities 506,302 406,829
Commitments and contingencies Common stock, par value $0.01,
100,000 shares authorized, 32,766 and 32,340 shares issued,
respectively 328 323 Additional paid-in capital 414,524 410,504
Treasury stock, at cost, 5,175 shares, respectively (43,210 )
(43,286 ) Accumulated other comprehensive loss (5,385 ) (5,648 )
(Accumulated deficit) retained earnings (12,628 ) 18,267
Total stockholders' equity 353,629 380,160 Total
liabilities and stockholders' equity $ 859,931 $ 786,989
Stage Stores, Inc.Condensed
Consolidated Statements of Cash Flows(in
thousands)(Unaudited)
Six Months Ended July 29, 2017 July 30,
2016 Cash flows from operating activities: Net loss $ (25,245 ) $
(15,419 ) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation, amortization and impairment of
long-lived assets 33,177 36,508 (Gain) loss on retirements of
property, equipment and leasehold improvements (528 ) 124 Deferred
income taxes 5,520 (1,404 ) Tax deficiency from stock-based
compensation — (3,230 ) Stock-based compensation expense 4,312
6,552 Amortization of debt issuance costs 144 109 Deferred
compensation obligation (76 ) 208 Amortization of employee benefit
related costs 424 448 Construction allowances from landlords 1,098
6,290 Other changes in operating assets and liabilities: Increase
in merchandise inventories (19,251 ) (25,121 ) Increase in other
assets (22,188 ) (9,415 ) Increase in accounts payable and other
liabilities 30,802 34,069 Net cash provided by
operating activities 8,189 29,719 Cash flows
from investing activities: Additions to property, equipment and
leasehold improvements (15,502 ) (57,677 ) Proceeds from insurance
and disposal of assets 1,307 1,047 Business acquisition (36,144 ) —
Net cash used in investing activities (50,339 ) (56,630 )
Cash flows from financing activities: Proceeds from
revolving credit facility borrowings 277,013 253,095 Payments of
revolving credit facility borrowings (211,891 ) (215,700 ) Proceeds
from long-term debt obligation — 5,830 Payments of long-term debt
obligations (4,850 ) (2,785 ) Payments of debt issuance costs (8 )
— Payments for stock related compensation (135 ) (817 ) Cash
dividends paid (5,650 ) (8,321 ) Net cash provided by financing
activities 54,479 31,302 Net increase in cash and
cash equivalents 12,329 4,391 Cash and cash equivalents:
Beginning of period 13,803 16,487 End of period $
26,132 $ 20,878
Stage Stores, Inc.Reconciliation
of Non-GAAP Financial Measures(in thousands, except earnings
per share)(Unaudited)
Three Months Ended Six Months Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30,
2016 Net (loss) income (GAAP) $ (6,258 ) $ 41 $ (25,245 ) $ (15,419
) Business acquisition costs (pretax) 2,933 — 9,208 — Store
closures, impairments and other strategic initiatives (pretax) 625
513 781 951 Consolidation of corporate headquarters and severance
charges associated with workforce reduction (pretax) — 794 — 904
Income tax impact (1,359 ) (522 ) (3,806 ) (720 ) Adjusted net
(loss) income (non-GAAP) $ (4,059 ) $ 826 $ (19,062 ) $
(14,284 ) Diluted (loss) earnings per share (GAAP) $ (0.23 )
$ — $ (0.93 ) $ (0.57 ) Business acquisition costs (pretax) 0.11 —
0.34 — Store closures, impairments and other strategic initiatives
(pretax) 0.02 0.02 0.03 0.04 Consolidation of corporate
headquarters and severance charges associated with workforce
reduction (pretax) — 0.03 — 0.03 Income tax impact (0.05 ) (0.02 )
(0.14 ) (0.03 ) Adjusted diluted (loss) earnings per share
(non-GAAP) $ (0.15 ) $ 0.03 $ (0.70 ) $ (0.53 )
Three Months Ended
Six Months Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016 Gross
profit (GAAP) $ 92,941 $ 85,570 $ 155,159 $ 152,557 Store closures
and impairments 513 231 513 231
Adjusted gross profit (non-GAAP) $ 93,454 $ 85,801 $
155,672 $ 152,788 Selling, general and
administrative expenses (GAAP) $ 100,643 $ 85,368 $ 189,152 $
175,512 Business acquisition costs (2,933 ) — (9,208 ) — Store
closures and other strategic initiatives (112 ) (282 ) (268 ) (720
) Consolidation of corporate headquarters and severance charges
associated with workforce reduction — (794 ) — (904 )
Adjusted selling, general and administrative expenses (non-GAAP) $
97,598 $ 84,292 $ 179,676 $ 173,888
Stage Stores, Inc.Reconciliation
of Non-GAAP Financial Measures (continued)(in thousands, except
earnings per share)(Unaudited)
Three Months Ended July 29, 2017 July
30, 2016 Loss before income tax (GAAP) $ (9,620 ) $ (990 ) Business
acquisition costs (pretax) 2,933 — Store closures, impairments and
other strategic initiatives (pretax) 625 513 Consolidation of
corporate headquarters and severance charges associated with
workforce reduction (pretax) — 794
Adjusted (loss) income before income tax (non-GAAP) $ (6,062 ) $
317 Income tax benefit (GAAP) $ (3,362 ) $ (1,031 ) Income
tax impact on adjustments 1,359 $ 522 Adjusted
income tax benefit (non-GAAP) $ (2,003 ) $ (509 ) Income tax
rate (GAAP) 35.0 % 104.2 % Adjusted income tax rate (non-GAAP) 33.1
% (160.3 )%
2017 Guidance Range
Low High Diluted loss per share (GAAP) $ (1.58 ) $ (1.13 ) Business
acquisition costs (pretax) 0.34 0.34 Store closures, impairments
and other strategic initiatives (pretax) 0.03 0.03 Income tax
impact (0.14 ) (0.14 ) Adjusted diluted loss per
share (non-GAAP) $ (1.35 ) $ (0.90 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170817005329/en/
Stage Stores, Inc.Randi Sonenshein, 713-331-4967Senior Vice
President, Finance and Strategyrsonenshein@stage.com
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