Stage Stores, Inc. (NYSE:SSI) today reported results for the
first quarter ended May 5, 2018, and reaffirmed guidance for fiscal
year 2018. For the first quarter, comparable sales decreased 2.8%.
Loss before income tax was $31.5 million, compared to a loss before
income tax of $27.9 million in the first quarter 2017.
Michael Glazer, President and Chief Executive Officer commented,
“While the first quarter began with positive comparable sales in
February, results were negatively impacted by unseasonably cold
temperatures in our geography in late March and early April. Once
the weather normalized in the second half of April, comparable
sales turned positive, and business has accelerated in May.
Notably, the underlying trends that emerged in 2017, including
recovery in our oil and gas states, double-digit ecommerce growth,
and the outperforming non-apparel business, have continued into
2018. In fact, our non-apparel business, which is less weather
sensitive, was up over 3% for the first quarter. Additionally, due
to our strong inventory management efforts, we maintained a
consistent flow of new merchandise to our stores, and ended the
first quarter with department store inventory levels down 5%
compared to the first quarter 2017.”
Mr. Glazer continued, “We remain confident that we will meet our
2018 sales and earnings guidance. We are especially excited about
accelerating the growth of our off-price business, and the recent
conversion of one of our department stores to Gordmans has exceeded
our expectations. As a result, we plan to redeploy capital to
convert six more department stores and open one new Gordmans
location in 2018.”
The company also announced that its Board of Directors declared
a quarterly cash dividend of $0.05 per share on its common stock,
payable on June 20, 2018 to shareholders of record at the close of
business on June 5, 2018.
First Quarter
Results
First quarter 2018 results compared to first quarter 2017
results were as follows:
- Net sales were $344 million compared to
$309 million
- Comparable sales decreased 2.8%
- Net loss was $31.7 million compared to
$19.0 million
- Loss per share was $1.14 compared to a
loss per share of $0.70
- EBIT was $(29.3) million compared to
$(26.3) million
2018 Guidance
For fiscal 2018, the company reaffirmed the following
guidance:
- Net sales between $1,610 million and
$1,640 million
- Comparable sales of flat to an increase
of 2.0%
- Net loss between $38 million and $27
million
- Tax rate of 0%, which, when compared to
2017, is expected to negatively impact 2018 EPS by $0.36 to $0.52
per diluted share within the comparable sales and EBIT guidance
ranges
- Loss per diluted share between $1.35
and $0.95
- Depreciation and amortization between
$55 million and $60 million
- EBIT between $(29) million and $(18)
million
Based on continued belief in the off-price model and the success
of its first Gordmans conversion, the company has updated its
capital expenditures and store portfolio guidance. The company now
plans the following for fiscal 2018:
- Capital expenditures of $30 million to
$35 million compared to prior guidance of $30 million; and
- Opening 1 new Gordmans store,
converting 5 to 10 department stores to Gordmans stores, and
closing an additional 30 to 35 department stores versus closing 25
to 30 department stores.
Revenue
Recognition
During the first quarter of 2018, the Company adopted Accounting
Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with
Customers (Topic 606). The impact of the adoption on the condensed
consolidated statements of operations reflects the reclassification
of credit income from selling, general and administrative expense
to revenue. The condensed consolidated balance sheets and cash flow
statements reflect the reclassification of the asset related to the
liability for sales returns to other current assets from inventory.
The Company adopted the standard using the full retrospective
method, and the condensed consolidated statements of operations,
balance sheets and cash flows for the prior year periods have been
restated.
Conference Call / Webcast
Information
The company will post a pre-recorded conference call today at
8:30 a.m. Eastern Time to discuss its results and guidance.
Interested parties may access the company’s call by dialing
866-393-5631 and providing conference ID 3989619. Alternatively,
interested parties may listen to an audio webcast of the call
through the Investor Relations section of the company’s website
(corporate.stage.com) under the “Webcasts” caption. A replay of the
call will be available online through June 28, 2018.
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 May 24, 2018, the company operates in 42 states
through 772 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE
specialty department stores and 59 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 Non-GAAP /
Adjusted 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 EBIT, which is a non-GAAP financial
measure. The company may also present other non-GAAP financial
measures which are 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 May 5, 2018 April 29, 2017 Amount
% to Sales (a) Amount % to Sales (a) Net sales $
344,229 100.0% $ 308,607 100.0% Credit income 15,514 4.5%
12,928 4.2% Total revenues 359,743 104.5% 321,535 104.2%
Cost of sales and related buying, occupancy and distribution
expenses 281,741 81.8% 246,389 79.8% Selling, general and
administrative expenses 107,277 31.2% 101,437 32.9% Interest
expense 2,253 0.7% 1,586 0.5% Loss before income tax
(31,528 ) (9.2)% (27,877 ) (9.0)% Income tax expense (benefit) 150
—% (8,890 ) (2.9)% Net loss $ (31,678 ) (9.2)% $ (18,987 )
(6.2)% Basic loss per share data: Basic loss per share $
(1.14 ) $ (0.70 ) Basic weighted average shares outstanding 27,765
27,268 Diluted loss per share data: Diluted
loss per share $ (1.14 ) $ (0.70 ) Diluted weighted average shares
outstanding 27,765 27,268 (a) Percentages may
not foot due to rounding.
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
May 5, February 3, April 29, 2018 2018
2017
ASSETS
Cash and cash equivalents $ 29,091 $ 21,250 $ 21,688 Merchandise
inventories, net 477,562 438,377 475,048 Prepaid expenses and other
current assets 48,762 52,407 48,195 Total
current assets 555,415 512,034 544,931 Property, equipment
and leasehold improvements, net 244,214 252,788 277,285 Intangible
assets 17,135 17,135 15,235 Other non-current assets, net 23,715
24,449 24,164 Total assets $ 840,479 $
806,406 $ 861,615
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 128,883 $ 145,991 $ 137,289 Accrued expenses and
other current liabilities 67,513 67,427 71,897
Total current liabilities 196,396 213,418 209,186 Long-term
debt obligations 265,469 180,350 219,756 Other long-term
liabilities 66,029 68,524 73,610 Total
liabilities 527,894 462,292 502,552
Commitments and contingencies Common stock, par value $0.01,
100,000 shares authorized, 33,111, 32,806 and 32,611 shares issued,
respectively 331 328 326 Additional paid-in capital 420,091 418,658
412,548 Treasury stock, at cost, 5,175 shares, respectively (43,339
) (43,298 ) (43,347 ) Accumulated other comprehensive loss (4,978 )
(5,177 ) (5,517 ) Accumulated deficit (59,520 ) (26,397 ) (4,947 )
Total stockholders' equity 312,585 344,114 359,063
Total liabilities and stockholders' equity $ 840,479
$ 806,406 $ 861,615
Stage Stores,
Inc. Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended May 5, 2018 April 29, 2017
Cash flows from operating activities: Net loss $ (31,678 ) $
(18,987 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization of long-lived
assets 15,151 16,377 Gain on retirements of property, equipment and
leasehold improvements (30 ) (452 ) Deferred income taxes — (1,117
) Stock-based compensation expense 1,558 2,182 Amortization of debt
issuance costs 74 72 Deferred compensation obligation 41 61
Amortization of employee benefit related costs 199 211 Construction
allowances from landlords — 998 Other changes in operating assets
and liabilities: Increase in merchandise inventories (39,185 )
(31,999 ) Decrease (increase) in other assets 4,303 (7,193 )
(Decrease) increase in accounts payable and other liabilities
(19,088 ) 39,534 Net cash used in operating activities
(68,655 ) (313 ) Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (6,930
) (7,359 ) Proceeds from insurance and disposal of assets 45 1,223
Business acquisition — (33,843 ) Net cash used in investing
activities (6,885 ) (39,979 ) Cash flows from financing
activities: Proceeds from revolving credit facility borrowings
164,071 153,311 Payments of revolving credit facility borrowings
(78,310 ) (96,559 ) Payments of long-term debt obligations (731 )
(4,083 ) Payments of debt issuance costs — (8 ) Payments for stock
related compensation (204 ) (257 ) Cash dividends paid (1,445 )
(4,227 ) Net cash provided by financing activities 83,381
48,177 Net increase in cash and cash equivalents 7,841 7,885
Cash and cash equivalents: Beginning of period 21,250
13,803 End of period $ 29,091 $ 21,688
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
The following table reconciles EBIT, a
non-GAAP financial measure, to the most directly comparable GAAP
measure, net loss (amounts in thousands):
Three Months Ended May 5, 2018 April 29, 2017 Net
loss (GAAP) $ (31,678 ) $ (18,987 ) Interest expense 2,253 1,586
Income tax expense (benefit) 150 (8,890 ) Earnings before
interest and taxes (EBIT) (non-GAAP) (29,275 ) (26,291 ) The
following table reconciles EBIT, a non-GAAP financial measure, to
the most directly comparable GAAP measure, net loss (amounts in
millions): 2018 Guidance Range Low
High Net loss (GAAP) $ (38 ) $ (27 ) Interest expense 9 9
Income tax — — EBIT (non-GAAP) $ (29 ) $ (18 )
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version on businesswire.com: https://www.businesswire.com/news/home/20180524005144/en/
Stage Stores, Inc.Alysha Tawney, 713-331-4902Manager, Strategy
and Investor RelationsIR@stage.com
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