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| 8-K - 8-K - STAGE STORES INC | form8-k_earnings.htm |
Exhibit 99
NEWS RELEASE
CONTACT:
Randi Sonenshein
Senior Vice President, Finance and Strategy
713-331-4967
(rsonenshein@stagestores.com)
Stage Stores Reports Fourth Quarter and Annual Results
HOUSTON, TX, March 3, 2016 - Stage Stores, Inc. (NYSE: SSI) today reported results for the fourth quarter and fiscal year ended January 30, 2016. The Company reported adjusted earnings per diluted share of $0.91 for the fourth quarter and $0.51 for fiscal 2015.
“Our holiday results were pressured by low oil prices, the devalued peso and record warm temperatures. Stores in the oil patch and along the Mexican border account for more than 40% of our sales, and the economic uncertainty in those areas negatively impacted our comp sales by 240 basis points during the fourth quarter. In light of these challenges and resulting soft traffic, we responded with higher than planned markdowns that enabled us to reduce inventory levels; ending the year more than 1% below last year,” said Michael Glazer, President and Chief Executive Officer. “We saw positive sales performance in several non-apparel categories along with 20% growth in our direct-to-consumer business. As we look ahead to 2016, we expect external headwinds to continue to impact the business. However, we believe our investments in omni-channel and store upgrades will position our business to deliver improved performance.”
Fourth Quarter and 2015 Results
For the fourth quarter, comparable sales decreased 3.4%. Sales decreased 4.2% to $502.6 million, as compared to $524.9 million in the prior year. Net income was $21.0 million, or $0.71 per diluted share, versus $1.36 per diluted share for the prior year. On an adjusted basis, net income was $26.8 million, or $0.91 per diluted share.
For fiscal 2015, comparable sales decreased 2.0%. Sales decreased 2.1% to $1,604.4 million for the fiscal year, as compared to $1,638.6 million in the prior year. Net income was $3.8 million, or $0.12 per diluted share, versus $0.96 per diluted share for the prior year. On an adjusted basis, net income was $16.2 million, or $0.51 per diluted share versus $1.18 per diluted share from continuing operations in the prior year. Three stores opened and 23 stores closed during the year.
Adjusted results exclude charges primarily associated with various strategic initiatives, including the consolidation of the Company’s headquarters, impairments related to store closures and severance charges associated with a workforce reduction. The adjustments, after tax, totaled approximately $12.4 million, or $0.39 per diluted share, for the fiscal year, with approximately $5.9 million, or $0.20 per diluted share, incurred during the fourth quarter.
Share Repurchase Program Update
During the fourth quarter, the Company repurchased 5.2 million shares for $41.6 million under the previously announced Board-approved repurchase program. The Company has $58.4 million remaining under the program.
Mr. Glazer commented, “Our decision to repurchase shares reflects the Board’s confidence in the Company’s strategic plan as well as our belief that our share price trades at a discount to its intrinsic value. In addition, our capital allocation strategy reflects our commitment to the dividend and investing in our core business.”
The share repurchase program has no expiration date and may be suspended or discontinued at any time. Any common shares acquired will be available to meet obligations under equity compensation plans and for general corporate purposes.
2016 Guidance
Sales are expected to be in a range of $1,530 to $1,560 million, assuming a -3% to -1% comparable sales. The Company has no plans to open stores and anticipates closing approximately 30 locations in 2016.
Earnings per diluted share are expected to be between $0.40 and $0.60. Weighted average diluted shares for the year are expected to be 27.8 million. The effective tax rate is estimated to be 36.2%.
Capital expenditures in 2016, net of construction allowances from landlords, are expected to be $72 million, compared to $87 million in 2015.
Mr. Glazer concluded, “We will continue to operate with disciplined expense controls and inventory management as we remain cautious in the current environment. We believe that investing in our omni-channel capabilities and stores will invigorate our business, drive sales, improve margins and create positive cash flow in 2016.”
Conference Call / Webcast Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its fiscal year results. Interested parties may participate in the Company’s conference call by dialing 844-368-2238. Alternatively, interested parties may listen to a live webcast of the conference call through the Investor Relations section of the Company’s website (www.stagestoresinc.com) under the “Webcasts” caption. A replay of the conference call will be available online until midnight on Friday, March 18, 2016.
About Stage Stores
Stage Stores, Inc. operates 832 specialty department stores in 38 states and a direct-to-consumer channel under the BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE nameplates. The Company’s stores, predominantly located in small towns and communities, and direct-to-consumer business offer a moderately priced, broad selection of trend-right, brand name apparel, accessories, cosmetics, footwear and home goods for the entire family. The Company’s direct-to-consumer channel includes its e-commerce website and Send program. Its e-commerce website features assortments of merchandise similar to that found in its stores, as well as products available exclusively online. The Send program allows customers in the stores to have merchandise shipped directly to their homes if the merchandise is not available in the local store. For more information about Stage Stores, visit the Company’s website at www.stagestoresinc.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,” “position” 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 | |||||||||||||
January 30, 2016 | January 31, 2015 | ||||||||||||
Amount | % to Sales (a) | Amount | % to Sales (a) | ||||||||||
Net sales | $ | 502,629 | 100.0 | % | $ | 524,886 | 100.0 | % | |||||
Cost of sales and related buying, occupancy and distribution expenses | 361,678 | 72.0 | % | 353,527 | 67.4 | % | |||||||
Gross profit | 140,951 | 28.0 | % | 171,359 | 32.6 | % | |||||||
Selling, general and administrative expenses | 106,076 | 21.1 | % | 100,260 | 19.1 | % | |||||||
Interest expense | 982 | 0.2 | % | 709 | 0.1 | % | |||||||
Income before income tax | 33,893 | 6.7 | % | 70,390 | 13.4 | % | |||||||
Income tax expense | 12,908 | 2.6 | % | 26,576 | 5.1 | % | |||||||
Income from continuing operations | 20,985 | 4.2 | % | 43,814 | 8.3 | % | |||||||
Loss from discontinued operations, net of tax benefit of $94 | — | — | % | (94 | ) | — | % | ||||||
Net income | $ | 20,985 | 4.2 | % | $ | 43,720 | 8.3 | % | |||||
Basic earnings per share data: | |||||||||||||
Continuing operations | $ | 0.72 | $ | 1.37 | |||||||||
Discontinued operations | — | — | |||||||||||
Basic earnings per share (b) | $ | 0.72 | $ | 1.37 | |||||||||
Basic weighted average shares outstanding | 28,828 | 31,657 | |||||||||||
Diluted earnings per share data: | |||||||||||||
Continuing operations | $ | 0.71 | $ | 1.36 | |||||||||
Discontinued operations | — | — | |||||||||||
Diluted earnings per share (b) | $ | 0.71 | $ | 1.36 | |||||||||
Diluted weighted average shares outstanding | 28,848 | 31,740 | |||||||||||
(a) Percentages may not foot due to rounding. | |||||||||||||
(b) EPS may not foot due to rounding. | |||||||||||||
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Twelve Months Ended | |||||||||||||
January 30, 2016 | January 31, 2015 | ||||||||||||
Amount | % to Sales (a) | Amount | % to Sales (a) | ||||||||||
Net sales | $ | 1,604,433 | 100.0 | % | $ | 1,638,569 | 100.0 | % | |||||
Cost of sales and related buying, occupancy and distribution expenses | 1,208,002 | 75.3 | % | 1,188,763 | 72.5 | % | |||||||
Gross profit | 396,431 | 24.7 | % | 449,806 | 27.5 | % | |||||||
Selling, general and administrative expenses | 387,859 | 24.2 | % | 386,104 | 23.6 | % | |||||||
Interest expense | 2,977 | 0.2 | % | 3,002 | 0.2 | % | |||||||
Income before income tax | 5,595 | 0.3 | % | 60,700 | 3.7 | % | |||||||
Income tax expense | 1,815 | 0.1 | % | 22,847 | 1.4 | % | |||||||
Income from continuing operations | 3,780 | 0.2 | % | 37,853 | 2.3 | % | |||||||
Loss from discontinued operations, net of tax benefit of $4,228 | — | — | % | (7,003 | ) | (0.4 | )% | ||||||
Net income | $ | 3,780 | 0.2 | % | $ | 30,850 | 1.9 | % | |||||
Basic earnings (loss) per share data: | |||||||||||||
Continuing operations | $ | 0.12 | $ | 1.18 | |||||||||
Discontinued operations | — | (0.22 | ) | ||||||||||
Basic earnings per share (b) | $ | 0.12 | $ | 0.96 | |||||||||
Basic weighted average shares outstanding | 31,145 | 31,675 | |||||||||||
Diluted earnings (loss) per share data: | |||||||||||||
Continuing operations | $ | 0.12 | $ | 1.18 | |||||||||
Discontinued operations | — | (0.22 | ) | ||||||||||
Diluted earnings per share (b) | $ | 0.12 | $ | 0.96 | |||||||||
Diluted weighted average shares outstanding | 31,188 | 31,763 | |||||||||||
(a) Percentages may not foot due to rounding. | |||||||||||||
(b) EPS may not foot due to rounding. | |||||||||||||
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
January 30, 2016 | January 31, 2015 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 16,487 | $ | 17,165 | |||
Merchandise inventories, net | 435,996 | 441,452 | |||||
Prepaid expenses and other current assets | 48,279 | 45,444 | |||||
Total current assets | 500,762 | 504,061 | |||||
Property, equipment and leasehold improvements, net | 311,717 | 285,450 | |||||
Intangible assets | 15,235 | 14,910 | |||||
Other non-current assets, net | 20,385 | 20,256 | |||||
Total assets | $ | 848,099 | $ | 824,677 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable | $ | 84,019 | $ | 121,778 | |||
Income taxes payable | 1,850 | 13,455 | |||||
Accrued expenses and other current liabilities | 70,013 | 69,549 | |||||
Total current liabilities | 155,882 | 204,782 | |||||
Long-term debt obligations | 162,876 | 45,673 | |||||
Deferred taxes | 20,277 | 20,474 | |||||
Other long-term liabilities | 79,311 | 77,818 | |||||
Total liabilities | 418,346 | 348,747 | |||||
Commitments and contingencies | — | — | |||||
Common stock, par value $0.01, 100,000 shares authorized, 32,030 and 31,632 shares issued, respectively | 320 | 316 | |||||
Additional paid-in capital | 406,034 | 395,395 | |||||
Less treasury stock - at cost, 5,175 and 0 shares, respectively | (43,068 | ) | (600 | ) | |||
Accumulated other comprehensive loss | (6,353 | ) | (6,874 | ) | |||
Retained earnings | 72,820 | 87,693 | |||||
Total stockholders' equity | 429,753 | 475,930 | |||||
Total liabilities and stockholders' equity | $ | 848,099 | $ | 824,677 | |||
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Twelve Months Ended | |||||||
January 30, 2016 | January 31, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 3,780 | $ | 30,850 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and impairment of long-lived assets | 77,599 | 63,447 | |||||
Loss on retirements of property, equipment and leasehold improvements | 719 | 110 | |||||
Deferred income taxes | (2,330 | ) | 3,348 | ||||
Tax benefit from stock-based compensation | 409 | 64 | |||||
Stock-based compensation expense | 12,394 | 9,664 | |||||
Amortization of debt issuance costs | 218 | 275 | |||||
Excess tax benefits from stock-based compensation | (945 | ) | (852 | ) | |||
Deferred compensation obligation | 881 | (367 | ) | ||||
Amortization of employee benefit related costs | 774 | 399 | |||||
Pension settlement | 748 | — | |||||
Construction allowances from landlords | 3,444 | 5,538 | |||||
Changes in operating assets and liabilities: | |||||||
Decrease (increase) in merchandise inventories | 5,456 | (7,045 | ) | ||||
Decrease (increase) in other assets | 1,551 | (1,737 | ) | ||||
Decrease in accounts payable and other liabilities | (64,398 | ) | (1,480 | ) | |||
Net cash provided by operating activities | 40,300 | 102,214 | |||||
Cash flows from investing activities: | |||||||
Additions to property, equipment and leasehold improvements | (90,695 | ) | (70,580 | ) | |||
Proceeds from insurance and disposal of assets | 43 | 2,946 | |||||
Addition to intangible assets | (325 | ) | — | ||||
Net cash used in investing activities | (90,977 | ) | (67,634 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility borrowings | 575,570 | 457,742 | |||||
Payments of revolving credit facility borrowings | (460,640 | ) | (471,227 | ) | |||
Payments of long-term debt obligations | (1,714 | ) | (2,352 | ) | |||
Payments of debt issuance costs | — | (663 | ) | ||||
Repurchases of common stock | (41,587 | ) | (2,755 | ) | |||
Payments for stock related compensation | (4,465 | ) | (1,844 | ) | |||
Proceeds from exercise of stock awards | 543 | 5,040 | |||||
Excess tax benefits from stock-based compensation | 945 | 852 | |||||
Cash dividends paid | (18,653 | ) | (16,970 | ) | |||
Net cash provided by (used in) financing activities | 49,999 | (32,177 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (678 | ) | 2,403 | ||||
Cash and cash equivalents: | |||||||
Beginning of period | 17,165 | 14,762 | |||||
End of period | $ | 16,487 | $ | 17,165 | |||
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
January 30, 2016 | January 31, 2015 | January 30, 2016 | January 31, 2015 | |||||||||||||
Net income (GAAP) | $ | 20,985 | $ | 43,720 | $ | 3,780 | $ | 30,850 | ||||||||
Loss from discontinued operations (GAAP) | — | 94 | — | 7,003 | ||||||||||||
Income from continuing operations (GAAP) | 20,985 | 43,814 | 3,780 | 37,853 | ||||||||||||
Consolidation of company headquarters, net of tax of $387 and $1,148, respectively | 1,210 | — | 2,390 | — | ||||||||||||
Store closures and other strategic initiatives, net of tax of $490 and $3,953, respectively | 2,861 | — | 8,233 | — | ||||||||||||
Severance charges associated with workforce reduction initiative and pension settlement, net of tax of $854 | 1,779 | — | 1,779 | — | ||||||||||||
Adjusted net income (non-GAAP)(a) | $ | 26,835 | $ | 43,814 | $ | 16,182 | $ | 37,853 | ||||||||
Diluted earnings per share (GAAP) | $ | 0.71 | $ | 1.36 | $ | 0.12 | $ | 0.96 | ||||||||
Loss from discontinued operations (GAAP) | — | — | — | 0.22 | ||||||||||||
Diluted earnings per share from continuing operations (GAAP) | 0.71 | 1.36 | 0.12 | 1.18 | ||||||||||||
Corporate headquarters consolidation | 0.04 | — | 0.07 | — | ||||||||||||
Store closures and other strategic initiatives | 0.10 | — | 0.26 | — | ||||||||||||
Severance charges associated with workforce reduction initiative and pension settlement | 0.06 | — | 0.06 | — | ||||||||||||
Adjusted diluted earnings per share (non-GAAP)(a) (b) | $ | 0.91 | $ | 1.36 | $ | 0.51 | $ | 1.18 | ||||||||
(a) Fiscal 2014 amounts are not adjusted. | ||||||||||||||||
(b) EPS may not foot due to rounding. | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
January 30, 2016 | January 31, 2015 | January 30, 2016 | January 31, 2015 | |||||||||||||
Gross profit (GAAP) | $ | 140,951 | $ | 171,359 | $ | 396,431 | $ | 449,806 | ||||||||
Store closures and other strategic initiatives | 1,929 | — | 10,580 | — | ||||||||||||
Adjusted gross profit (non-GAAP) | $ | 142,880 | $ | 171,359 | $ | 407,011 | $ | 449,806 | ||||||||
Selling, general and administrative expenses (GAAP) | $ | 106,076 | $ | 100,260 | $ | 387,859 | $ | 386,104 | ||||||||
Interest expense (GAAP) | 982 | 709 | 2,977 | 3,002 | ||||||||||||
Corporate headquarters consolidation | (1,597 | ) | — | (3,538 | ) | — | ||||||||||
Store closures and other strategic initiatives | (1,422 | ) | — | (1,606 | ) | — | ||||||||||
Severance charges associated with workforce reduction initiative and pension settlement | (2,633 | ) | — | (2,633 | ) | — | ||||||||||
Adjusted expenses (non-GAAP)(a) | $ | 101,406 | $ | 100,969 | $ | 383,059 | $ | 389,106 | ||||||||
(a) Fiscal 2014 amounts are not adjusted. | ||||||||||||||||