Stage Stores Reports Record Second Quarter Earnings; 11% Increase in Adjusted EPS
Stage Stores Reports Record Second Quarter Earnings;11% Increase in Adjusted EPS
HOUSTON--(BUSINESS WIRE)-- Stage Stores, Inc. (NYS: SSI) today reported financial results for the second fiscal quarter ended August 3, 2013.
Total sales for the quarter increased 3.6% to $395 million from $382 million in the prior year quarter ended July 28, 2012. Comparable store sales increased 1.7%. The Company noted that its men's, children's, junior's, cosmetics and footwear categories all had comparable store sales increases for the quarter that exceeded the Company average. Geographically, the Company's best performing regions were the Southwest and South Central.
The Company reported record adjusted earnings for the second quarter, excluding one-time items, of $0.41 per diluted share. This compares to earnings of $0.37 per diluted share, last year. The Company noted that adjusted earnings per share were up 11% over last year.
"After a slow start to the quarter, sales improved as the weather normalized," said Michael Glazer, President and Chief Executive Officer. "We ended the quarter with a nice surge from the start of the back-to-school shopping period. We are pleased with our sales performance and record adjusted earnings for the quarter. However, an elevated promotional environment and shortfall in sales at the South Hill stores prevented our earnings from being even higher. While the operational components of the consolidation have been completed, the alignment of merchandise assortments in the stores is taking longer than expected. We are confident that our South Hill stores sales will steadily improve during the fall season as our assortments become more congruent throughout all stores."
For the first six months of the fiscal year, the Company reported total sales of $774 million and a 1.2% comparable store sales increase. Adjusted earnings, excluding one-time items, were $0.39 per diluted share.
Mr. Glazer concluded, "Based on the heightened promotional environment and the overall retail market weakness, it's prudent to adjust our sales and earnings guidance. We are now forecasting comparable store sales for the second half of the year to be flat to up 2.0%. As a result of our lower sales assumption, we are also revising our adjusted earnings outlook for the year to $1.30 to $1.40 per diluted share."
Reported Earnings and One-Time Items
Including one-time items, the Company reported earnings for the second quarter of $9.6 million, or $0.29 per diluted share. One-time items, which total approximately $6.5 million, or $0.12 per share, are associated with the consolidation of the Company's South Hill, Virginia operations into its Houston headquarters. Of the $6.5 million, $4.4 million is included in gross profit and $2.1 million is included in SG&A expenses. For the first six months of the fiscal year, the Company reported earnings of $2.8 million, or $0.08 per diluted share, this year compared to $11.2 million, or $0.36 per diluted share, last year. One-time items total approximately $16.2 million, or $0.31 per share, this year versus approximately $3.0 million, or $0.06 per share, last year.
FY 2013 Guidance
The Company revised its comparable store sales guidance range for the full year to an increase of 0.6% to 1.6%, which assumes comps of zero to 2.0% for the second half of the year. The Company also revised its adjusted EPS guidance range for the year, excluding one-time items, to $1.30 - $1.40 from $1.45 - $1.55 previously. 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 $21.7 million, or $0.41 per diluted share, for the year.
FY 2013 OUTLOOK | FY 2012 | |||||||||||||
Sales ($mm) | $1,672 | - | $1,690 | $1,646 | ||||||||||
Same Store sales | +0.6% | - | +1.6% | +5.7% | ||||||||||
Adjusted EPS | $1.30 | - | $1.40 | $1.33 | ||||||||||
Diluted Shares (m) | 33,600 | 31,600 | ||||||||||||
Conference Call Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its second quarter results. Interested parties can participate in the Company's conference call by dialing 703-639-1414. 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, August 30, 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 currently operates 872 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 comparable store sales outlook for the second half of the fiscal year. Forward-looking statements also include comments regarding the Company's sales, comparable store sales, adjusted EPS and diluted share count outlooks for the 2013 fiscal year. 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 April 3, 2013, 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.
Stage Stores, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Thirteen Weeks Ended | ||||||||||||||||
August 3, 2013 | July 28, 2012 | |||||||||||||||
Amount | % to Sales (1) | Amount | % to Sales (1) | |||||||||||||
Net sales | $ | 395,331 | 100.0 | % | $ | 381,624 | 100.0 | % | ||||||||
Cost of sales and related buying, occupancy and distribution expenses | 279,862 | 70.8 | % | 266,450 | 69.8 | % | ||||||||||
Gross profit | 115,469 | 29.2 | % | 115,174 | 30.2 | % | ||||||||||
Selling, general and administrative expenses | 99,323 | 25.1 | % | 94,747 | 24.8 | % | ||||||||||
Store opening costs | 122 | — | % | 583 | 0.2 | % | ||||||||||
Interest expense | 708 | 0.2 | % | 951 | 0.2 | % | ||||||||||
Income before income tax | 15,316 | 3.9 | % | 18,893 | 5.0 | % | ||||||||||
Income tax expense | 5,709 | 1.4 | % | 7,231 | 1.9 | % | ||||||||||
Net income | $ | 9,607 | 2.4 | % | $ | 11,662 | 3.1 | % | ||||||||
Basic and diluted earnings per share data: | ||||||||||||||||
Basic earnings per share | $ | 0.29 | $ | 0.37 | ||||||||||||
Basic weighted average shares outstanding | 32,762 | 31,010 | ||||||||||||||
Diluted earnings per share | $ | 0.29 | $ | 0.37 | ||||||||||||
Diluted weighted average shares outstanding | 33,073 | 31,225 | ||||||||||||||
(1) Percentages may not foot due to rounding. | ||||||||||||||||
Stage Stores, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(in thousands, except earnings per share) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Twenty-Six Weeks Ended | ||||||||||||||||
August 3, 2013 | July 28, 2012 | |||||||||||||||
Amount | % to Sales (1) | Amount | % to Sales (1) | |||||||||||||
Net sales | $ | 773,968 | 100.0 | % | $ | 747,318 | 100.0 | % | ||||||||
Cost of sales and related buying, occupancy and distribution expenses | 568,283 | 73.4 | % | 538,305 | 72.0 | % | ||||||||||
Gross profit | 205,685 | 26.6 | % | 209,013 | 28.0 | % | ||||||||||
Selling, general and administrative expenses | 198,927 | 25.7 | % | 187,487 | 25.1 | % | ||||||||||
Store opening costs | 1,094 | 0.1 | % | 1,528 | 0.2 | % | ||||||||||
Interest expense | 1,294 | 0.2 | % | 1,782 | 0.2 | % | ||||||||||
Income before income tax | 4,370 | 0.6 | % | 18,216 | 2.4 | % | ||||||||||
Income tax expense | 1,619 | 0.2 | % | 6,972 | 0.9 | % | ||||||||||
Net income | $ | 2,751 | 0.4 | % | $ | 11,244 | 1.5 | % | ||||||||
Basic and diluted earnings per share data: | ||||||||||||||||
Basic earnings per share | $ | 0.08 | $ | 0.36 | ||||||||||||
Basic weighted average shares outstanding | 32,534 | 30,773 | ||||||||||||||
Diluted earnings per share | $ | 0.08 | $ | 0.36 | ||||||||||||
Diluted weighted average shares outstanding | 32,908 | 30,988 | ||||||||||||||
(1) Percentages may not foot due to rounding. | ||||||||||||||||
Stage Stores, Inc. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(in thousands, except par value) | ||||||||||
(Unaudited) | ||||||||||
August 3, 2013 | February 2, 2013 | |||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 34,146 | $ | 17,937 | ||||||
Merchandise inventories, net | 442,250 | 413,928 | ||||||||
Prepaid expenses and other current assets | 43,743 | 35,467 | ||||||||
Total current assets | 520,139 | 467,332 | ||||||||
Property, equipment and leasehold improvements, net | 289,769 | 290,701 | ||||||||
Intangible asset | 14,910 | 14,910 | ||||||||
Other non-current assets, net | 25,399 | 21,928 | ||||||||
Total assets | $ | 850,217 | $ | 794,871 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Accounts payable | $ | 142,825 | $ | 110,826 | ||||||
Accrued expenses and other current liabilities | 66,672 | 97,246 | ||||||||
Total current liabilities | 209,497 | 208,072 | ||||||||
Long-term debt obligations | 56,240 | 11,585 | ||||||||
Other long-term liabilities | 110,290 | 110,344 | ||||||||
Total liabilities | 376,027 | 330,001 | ||||||||
Commitments and contingencies | - | - | ||||||||
Common stock, par value $0.01, 100,000 shares authorized, | ||||||||||
32,809 and 32,014 shares issued, respectively | 328 | 320 | ||||||||
Additional paid-in capital | 390,589 | 376,615 | ||||||||
Less treasury stock - at cost, 0 and 0 shares, respectively | (898 | ) | (701 | ) | ||||||
Accumulated other comprehensive loss | (5,946 | ) | (6,135 | ) | ||||||
Retained earnings | 90,117 | 94,771 | ||||||||
Total stockholders' equity | 474,190 | 464,870 | ||||||||
Total liabilities and stockholders' equity | $ | 850,217 | $ | 794,871 | ||||||
Stage Stores, Inc. | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
Twenty-Six Weeks Ended | ||||||||||
August 3, 2013 | July 28, 2012 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 2,751 | $ | 11,244 | ||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||
Depreciation, amortization, and impairment of long-lived assets | 30,664 | 30,262 | ||||||||
Loss on retirements of property and equipment | 261 | - | ||||||||
Deferred income taxes | 70 | 449 | ||||||||
Tax benefit (deficiency) from stock-based compensation | 1,779 | (893 | ) | |||||||
Stock-based compensation expense | ||||||||||
