Stage Stores Reports Record Adjusted 2012 EPS of $1.33, 45% Higher Than 2011

Stage Stores Reports Record Adjusted 2012 EPS of $1.33, 45% Higher Than 2011

HOUSTON--(BUSINESS WIRE)-- Stage Stores, Inc. (NYS: SSI) today reported financial results for the fourth quarter and fiscal year ended February 2, 2013. For the 2012 fiscal year, the Company reported adjusted earnings, excluding one-time items, of $42.6 million, or $1.33 per diluted share. This compares to earnings of $31.0 million, or $0.92 per diluted share, in fiscal 2011.

"2012 was a phenomenal year for Stage Stores and one that all of our shareholders and associates can be extremely proud of," stated Michael Glazer, President and Chief Executive Officer. "We achieved strong gains in sales and earnings and made significant progress on our strategic initiatives. Total sales exceeded $1.6 billion and we achieved a 5.7% increase in comparable store sales, the highest percentage increase in over 10 years. Driven by our record sales, adjusted earnings per share increased by 45% to a record $1.33."


New store growth included 25 traditional stores and 31 Steele's stores during the year. Direct-To-Consumer sales increased 65% over last year. A new loyalty program with enhanced cardholder benefits was introduced and new cards were reissued to more than 2 million customers. Consistent with the Company's intent to increase distributions to its shareholders, Stage Stores quarterly dividend rate was increased by 11%.

As the Company noted in its news release on February 11, 2013, it started the process of consolidating its department store operations into its Houston corporate headquarters. The Company expects the consolidation to increase efficiency, create synergies and enhance purchasing power and sales growth. The Company projects annual savings from the consolidation to be approximately $5 million.

One-time items, which total approximately $6.9 million for the year, were due to the consolidation of the Company's South Hill, Virginia operations and the resignation of the Company's former Chief Executive Officer in March 2012. Including these items, the Company's net income for the fiscal year was $38.2 million, or $1.19 per diluted share. For the fourth quarter, the Company reported earnings of $35.8 million, or $1.09 per diluted share, compared to earnings of $32.7 million, or $1.05 per diluted share, for the prior year's fourth quarter.

"From an operational standpoint, we strengthened our executive management team with the addition of Steve Lawrence, our Chief Merchandising Officer, and Bill Gentner, our Chief Marketing Officer, and with the promotion of Russ Lundy to EVP, Stores," stated Mr. Glazer. "Through their guidance and leadership, and in collaboration with the other members of the executive management team, we continue to make improvements to our merchandise, marketing and stores.

"As we enter 2013, we have great momentum and our inventory is well positioned for growth. We have strategically increased our inventory investment to take advantage of several opportunities. We clearly expect to see meaningful sales and earnings growth in 2013 and beyond," Mr. Glazer concluded.

Financial highlights for FY 2012:

  • Total sales increased 8.9% to $1,646 million. FY 2012 had 53 weeks while FY 2011 had 52 weeks. The 53rd week in FY 2012 added $16 million to total sales. On a 52 week basis, comparable store sales increased 5.7%.

  • Direct-To-Consumer sales increased 65% versus the prior year. Direct-To-Consumer sales positively impacted the Company's same store sales by 0.5% in FY 2012.

  • Adjusted gross profit, as a percentage of net sales, improved by 90 basis points compared with FY 2011. The adjusted merchandise margin rate improved 20 basis points due to lower markdowns, while buying, occupancy and distribution costs improved 70 basis points due to leverage from higher sales.

  • Adjusted selling, general and administrative expenses, as a percentage of net sales, increased by 20 basis points over FY 2011. Leverage in store expenses and an improved benefit from the Company's private label credit card program were offset by an increase in incentive compensation costs.

  • Adjusted earnings per diluted share increased 45% to $1.33 over last year. Including the one-time items, EPS was $1.19. Adjusted net income was $42.6 million, a 37% increase compared to $31.0 million for last year. Including the one-time items, net income was $38.2 million. Diluted average shares outstanding for FY 2012 were 31.6 million compared to 33.3 million for FY 2011.

Fiscal 2013 Outlook

The Company expects that comparable store sales for the year will increase 2% to 4% and that EPS, excluding one-time items, will be in a range of $1.45 to $1.55. The one-time items are associated with the consolidation of the Company's South Hill operations into its Houston headquarters and are estimated to be approximately $16 million, or $0.30 per diluted share, for the year.

FY 2013 OUTLOOK

FY 2012

Sales ($mm)

$

1,689

-

$

1,721

$

1,646

Adjusted EPS

$

1.45

-

$

1.55

$

1.33

Diluted Shares (m)

33,200

31,600

The Company added that it plans to open approximately 40 stores during the year, and expects net capital expenditures of approximately $57 million, compared to $45 million in FY 2012. The increase in net capital expenditures is due to additional investments in existing stores for the upgrading of store fixtures and visual merchandising, the installation of additional cosmetics counters and IT initiatives.

Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter and full year results. Interested parties can participate in the Company's conference call by dialing 703-639-1123. 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 and then the webcast link. A replay of the conference call will be available online until midnight on Friday, March 22, 2013.

About Stage Stores

Stage Stores, Inc. operates primarily in small and mid-sized towns and communities. Its stores, which operate under the Bealls, Goody's, Palais Royal, Peebles, Stage and Steele's names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company operates 864 stores in 40 states. The Company also has an eCommerce website. 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 Company's expectations for sales, comparable store sales, EPS and diluted share count for the 2013 fiscal year. Forward-looking statements also include comments regarding the Company's expectations for the number of traditional and Steele's stores that it plans to open in the 2013 fiscal year, as well as the amount of net capital expenditures. 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 28, 2012, 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.

Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)

Fourteen Weeks Ended

Thirteen Weeks Ended

February 2, 2013

January 28, 2012

Amount

% to Sales (1)

Amount

% to Sales (1)

Net sales

$

527,899

100.0

%

$

479,096

100.0

%

Cost of sales and related buying, occupancy and distribution expenses

357,001

67.6

%

328,736

68.6

%

Gross profit

170,898

32.4

%

150,360

31.4

%

Selling, general and administrative expenses

112,768

21.4

%

97,163

20.3

%

Store opening costs

500

0.1

%

452

0.1

%

Interest expense, net of income of $0 and $0, respectively

661

0.1

%

1,015

0.2

%

Income before income tax

56,969

10.8

%

51,730

10.8

%

Income tax expense

21,176

4.0

%

19,016

4.0

%

Net income

$

35,793

6.8

%

$

32,714

6.8

%

Basic and diluted earnings per share data:

Basic earnings per share

$

1.10

$

1.06

Basic weighted average shares outstanding

31,957

30,432

Diluted earnings per share

$

1.09

$

1.05

Diluted weighted average shares outstanding

32,376

30,603

(1) Percentages may not foot due to rounding.

Stage Stores, Inc.

Consolidated Statements of Income

(in thousands, except earnings per share)

(Unaudited)

Fifty-Three Weeks Ended

Fifty-Two Weeks Ended

February 2, 2013

January 28, 2012

Amount

% to Sales (1)

Amount

% to Sales (1)

Net sales

$

1,645,800

100.0

%

$

1,511,919

100.0

%

Cost of sales and related buying, occupancy and distribution expenses

1,186,025

72.1

%

1,101,319

72.8

%

Gross profit

459,775

27.9

%

410,600

27.2

%

Selling, general and administrative expenses

392,727

23.9

%

353,834

23.4

%

Store opening costs

3,657

0.2

%

5,670

0.4

%

Interest expense, net of income of $0 and $24, respectively

3,011

0.2

%

3,821

0.3

%

Income before income tax

60,380

3.7

%

47,275

3.1

%

Income tax expense

22,201

1.3

%

16,315

1.1

%

Net income

$

38,179

2.3

%

$

30,960

2.0

%

Basic and diluted earnings per share data:

Basic earnings per share

$

1.20

$

0.93

Basic weighted average shares outstanding

31,278

33,021

Diluted earnings per share

$

1.19

$

0.92

Diluted weighted average shares outstanding

31,600

33,278

(1) Percentages may not foot due to rounding.

Stage Stores, Inc.

Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)

February 2, 2013

January 28, 2012

ASSETS

Cash and cash equivalents

$

17,937

$

18,621

Merchandise inventories, net

413,928

347,944

Prepaid expenses and other current assets

35,467

33,434

Total current assets

467,332

399,999

Property, equipment and leasehold improvements, net

292,801

300,717

Intangible asset

14,910

14,910

Other non-current assets, net

21,928

19,713

Total assets

$

796,971

$

735,339

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$

110,826

$

106,022

Income taxes payable

14,929

6,187

Current portion of debt obligations

744

13,782

Accrued expenses and other current liabilities

83,673