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STAGE STORES INC
Symbol	SSI
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Stage Stores Reports Second Quarter Results

2014-08-21 06:00 ET - News Release

HOUSTON -- (Business Wire)

Stage Stores, Inc. (NYSE: SSI) today reported financial results for the second quarter ended August 2, 2014.

Total sales were $377 million. Comparable store sales decreased 4.2%. The Company reported net income of $11.2 million, or $0.35 per diluted share, versus EPS of $0.29 for the second quarter of the prior year period. On an adjusted basis, EPS from continuing operations in the 2013 second quarter was $0.45.

Michael Glazer, President and Chief Executive Officer, stated, “We found the second quarter to be challenging, but we were encouraged that our sales trend improved towards the end of the quarter. We were pleased with the performance of our back-to-school categories as well as cosmetics, which delivered another strong quarterly performance. We managed our merchandise margins and inventory well and feel good about forward looking inventory levels and content. We expect improved second half results given our sales driving initiatives.”

Reported Results

The Company reported earnings of $11.2 million, or $0.35 per diluted share, for the second quarter. For the prior year’s second quarter, including discontinued operations and one-time items, the Company reported earnings of $9.6 million, or $0.29 per diluted share. The prior year’s quarterly earnings include results from the Steele’s division, which was sold on March 7, 2014.

For the first six months of the fiscal year, comparable store sales decreased 2.2%. The net loss for the first half of 2014, including discontinued operations, was $7.6 million, or $0.24 per share, compared to net income of $2.8 million, or $0.08 per diluted share, in the comparable prior year period.

Revised Full Year 2014 Guidance

Comparable store sales for the second half of the year are now expected to be in the range of flat to positive 2.0%. EPS guidance for the full year from continuing operations is now expected to be in the range of $1.05 - $1.15.


	FY 2014 OUTLOOK*			FY 2013*
Sales ($mm)	$1,610	-	$1,625	$1,610

EPS	$1.05	-	$1.15	$1.22**

Diluted Shares (m)	32,240			32,765

*From continuing operations.
**Adjusted to exclude one-time items.

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 703-639-1358. 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 29, 2014.

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 and Stage names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company currently operates 849 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 sales, EPS and diluted share count outlooks for the 2014 fiscal year. Forward-looking statements also include comments regarding the Company’s outlook for comparable store sales for the second half of the 2014 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 2, 2014, 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.
Condensed Consolidated Statements of Operations
(in thousands, except earnings per share data)
(Unaudited)

	Thirteen Weeks Ended
	August 2, 2014				August 3, 2013
	Amount		% to Sales (1)		Amount			% to Sales (1)

Net sales	$	377,446	100.0	%	$	389,991		100.0	%
Cost of sales and related buying, occupancy and distribution expenses		265,106	70.2	%		274,416		70.4	%
Gross profit		112,340	29.8	%		115,575		29.6	%
Selling, general and administrative expenses		93,108	24.7	%		97,489		25.0	%
Store opening costs		224	0.1	%		122		0.0	%
Interest expense		755	0.2	%		708		0.2	%
Income from continuing operations before income tax		18,253	4.8	%		17,256		4.4	%
Income tax expense		7,061	1.9	%		6,424		1.6	%
Income from continuing operations		11,192	3.0	%		10,832		2.8	%
Loss from discontinued operations, net of tax benefit of $0 and $715, respectively		-	0.0	%		(1,225	)	-0.3	%
Net income	$	11,192	3.0	%	$	9,607		2.5	%

Basic earnings (loss) per share data:
Continuing operations	$	0.35			$	0.33
Discontinued operations		-				(0.04	)
Basic earnings per share	$	0.35			$	0.29
Basic weighted average shares outstanding		31,757				32,762

Diluted earnings (loss) per share data:
Continuing operations	$	0.35			$	0.33
Discontinued operations		-				(0.04	)
Diluted earnings per share	$	0.35			$	0.29
Diluted weighted average shares outstanding		31,825				33,073

(1) Percentages may not foot due to rounding.


Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except earnings per share data)
(Unaudited)

	Twenty-Six Weeks Ended
	August 2, 2014					August 3, 2013
	Amount			% to Sales (1)		Amount			% to Sales (1)

Net sales	$	749,486		100.0	%	$	762,094		100.0	%
Cost of sales and related buying, occupancy and distribution expenses		559,205		74.6	%		556,890		73.1	%
Gross profit		190,281		25.4	%		205,204		26.9	%
Selling, general and administrative expenses		189,162		25.2	%		195,436		25.6	%
Store opening costs		1,032		0.1	%		1,097		0.1	%
Interest expense		1,479		0.2	%		1,294		0.2	%
Income (loss) from continuing operations before income tax		(1,392	)	-0.2	%		7,377		1.0	%
Income tax expense (benefit)		(538	)	-0.1	%		2,733		0.4	%
Income (loss) from continuing operations		(854	)	-0.1	%		4,644		0.6	%
Loss from discontinued operations, net of tax benefit of $4,257 and $1,114, respectively		(6,748	)	-0.9	%		(1,893	)	-0.2	%
Net income (loss)	$	(7,602	)	-1.0	%	$	2,751		0.4	%

Basic earnings (loss) per share data:
Continuing operations	$	(0.03	)			$	0.14
Discontinued operations		(0.21	)				(0.06	)
Basic earnings (loss) per share	$	(0.24	)			$	0.08
Basic weighted average shares outstanding		31,624					32,534

Diluted earnings (loss) per share data:
Continuing operations	$	(0.03	)			$	0.14
Discontinued operations		(0.21	)				(0.06	)
Diluted earnings per share	$	(0.24	)			$	0.08
Diluted weighted average shares outstanding		31,624					32,908

(1) Percentages may not foot due to rounding.


Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)

	August 2, 2014			February 1, 2014

ASSETS
Cash and cash equivalents	$	26,094		$	14,762
Merchandise inventories, net		451,465			434,407
Prepaid expenses and other current assets		48,368			40,082
Total current assets		525,927			489,251

Property, equipment and leasehold improvements, net		280,903			282,534
Intangible asset		14,910			14,910
Other non-current assets, net		24,112			24,142
Total assets	$	845,852		$	810,837

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	125,480		$	125,707
Accrued expenses and other current liabilities		69,796			69,549
Total current liabilities		195,276			195,256

Long-term debt obligations		107,415			60,871
Other long-term liabilities		96,666			100,266
Total liabilities		399,357			356,393

Commitments and contingencies		-			-

Common stock, par value $0.01, 100,000 shares authorized,
31,789 and 31,222 shares issued, respectively		318			312
Additional paid-in capital		391,678			384,295
Less treasury stock - at cost, 0 and 0 shares, respectively		(855	)		(967	)
Accumulated other comprehensive loss		(4,493	)		(4,616	)
Retained earnings		59,847			75,420
Total stockholders' equity		446,495			454,444
Total liabilities and stockholders' equity	$	845,852		$	810,837


Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

	Twenty-Six Weeks Ended
	August 2, 2014			August 3, 2013
Cash flows from operating activities:
Net income (loss)	$	(7,602	)	$	2,751
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation, amortization and impairment of long-lived assets		31,261			30,664
Loss on retirements of property, equipment and leasehold improvements		655			261
Deferred income taxes		(262	)		70
Tax benefit from stock-based compensation		126			1,779
Stock-based compensation expense		4,436			4,025
Amortization of debt issuance costs		150			129
Excess tax benefits from stock-based compensation		(826	)		(1,998	)
Deferred compensation obligation		(112	)		197
Amortization of employee benefit related costs		199			305
Construction allowances from landlords		2,756			1,418
Changes in operating assets and liabilities:
Increase in merchandise inventories		(17,058	)		(28,322	)
Increase in other assets		(8,416	)		(11,764	)
Decrease in accounts payable and other liabilities		(7,396	)		(344	)
Total adjustments		5,513			(3,580	)
Net cash used in operating activities		(2,089	)		(829	)

Cash flows from investing activities:
Additions to property, equipment and leasehold improvements		(30,286	)		(29,937	)
Proceeds from disposal of assets		1,448			11
Net cash used in investing activities		(28,838	)		(29,926	)

Cash flows from financing activities:
Proceeds from revolving credit facility borrowings		227,365			214,725
Payments of revolving credit facility borrowings		(179,600	)		(169,650	)
Payments of long-term debt obligations		(1,412	)		(363	)
Payments of debt issuance costs		-			(125	)
Payments for stock related compensation		(1,989	)		(2,165	)
Proceeds from exercise of stock awards		5,040			9,949
Excess tax benefits from stock-based compensation		826			1,998
Cash dividends paid		(7,971	)		(7,405	)
Net cash provided by financing activities		42,259			46,964
Net increase in cash and cash equivalents		11,332			16,209

Cash and cash equivalents:
Beginning of period		14,762			17,937
End of period	$	26,094		$	34,146


Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	August 2, 2014		August 3, 2013		August 2, 2014			August 3, 2013

Net income (loss):
On a U.S. GAAP basis	$	11,192	$	9,607	$	(7,602	)	$	2,751
Loss from discontinued operations		-		1,225		6,748			1,893
Income (loss) from continuing operations		11,192		10,832		(854	)		4,644
South Hill Consolidation related charges, net of tax of $2,367 and 5,983, respectively		-		4,104		-			10,166
On a non-U.S. GAAP basis	$	11,192	$	14,936	$	(854	)	$	14,810

Diluted earnings (loss) per share:
On a U.S. GAAP basis	$	0.35	$	0.29	$	(0.24	)	$	0.08
Loss from discontinued operations		-		0.04		0.21			0.06
Income (loss) from continuing operations		0.35		0.33		(0.03	)		0.14
South Hill Consolidation related charges		-		0.12		-			0.31
On a non-U.S. GAAP basis	$	0.35	$	0.45	$	(0.03	)	$	0.45

Contacts:

Stage Stores, Inc.
Bob Aronson, 800-579-2302
Vice President, Investor Relations
baronson@stagestores.com

Source: Stage Stores, Inc.