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| 8-K - 8-K - STAGE STORES INC | form8-k_earnings2q2016.htm |
Exhibit 99
NEWS RELEASE
CONTACT:
Randi Sonenshein
Senior Vice President, Finance and Strategy
713-331-4967
(rsonenshein@stagestores.com)
Stage Stores Reports Second Quarter Earnings and
Declares Quarterly Cash Dividend
HOUSTON, TX, August 18, 2016 - Stage Stores, Inc. (NYSE: SSI) today reported financial results for the second quarter ended July 30, 2016 and affirmed guidance for the fiscal year.
“Our second quarter results were hurt by a challenging retail environment and continued regional pressure from depressed oil prices and the weak peso. That said, we are pleased with our flat merchandise margins, rigorous expense controls, and strong inventory management,” said Michael Glazer, President and Chief Executive Officer. “While we anticipate the macro headwinds will continue, we expect the impact on our business to lessen as we anniversary the sluggish business that started late in the third quarter of last year. We are intensely focused on generating positive cash flow and continue to manage our business for the long term by investing in our stores, growing our omnichannel business, and delivering value to our shareholders through our dividend.”
The Company announced that its Board of Directors has declared a quarterly cash dividend of 15 cents per share on the Company’s common stock, payable on September 14, 2016 to shareholders of record at the close of business on August 30, 2016.
Second Quarter Reported Results
For the second quarter, comparable sales decreased 9.8%. Total sales decreased 11.2% to $338.4 million, as compared to $380.9 million in the prior year. Net income was $0.04 million, or $0.00 per diluted share, versus $0.05 per diluted share for the prior year.
On an adjusted basis, net income was $0.8 million, or $0.03 per diluted share versus $0.22 per diluted share in the prior year. Adjusted second quarter results excluded charges related to severance associated with workforce reductions and strategic store closures of approximately $0.8 million, or $0.03 per diluted share.
2016 Guidance
The Company affirmed its fiscal year guidance of comparable sales of -6% to -4% and adjusted earnings per diluted share of $0.20 to $0.40. Weighted average diluted shares for the year are expected to be 28.2 million.
Capital expenditures in 2016, net of construction allowances from landlords, are expected to be approximately $65 million, compared to $87 million in 2015.
Conference Call / Webcast Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its second quarter 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, September 2, 2016.
About Stage Stores
Stage Stores, Inc. operates 821 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” 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 | |||||||||||||
July 30, 2016 | August 1, 2015 | ||||||||||||
Amount | % to Sales (a) | Amount | % to Sales (a) | ||||||||||
Net sales | $ | 338,385 | 100.0 | % | $ | 380,916 | 100.0 | % | |||||
Cost of sales and related buying, occupancy and distribution expenses | 252,815 | 74.7 | % | 282,461 | 74.2 | % | |||||||
Gross profit | 85,570 | 25.3 | % | 98,455 | 25.8 | % | |||||||
Selling, general and administrative expenses | 85,368 | 25.2 | % | 95,212 | 25.0 | % | |||||||
Interest expense | 1,192 | 0.4 | % | 673 | 0.2 | % | |||||||
Income (loss) before income tax | (990 | ) | (0.3 | )% | 2,570 | 0.7 | % | ||||||
Income tax expense (benefit) | (1,031 | ) | (0.3 | )% | 955 | 0.3 | % | ||||||
Net income | $ | 41 | — | % | $ | 1,615 | 0.4 | % | |||||
Basic earnings per share data: | |||||||||||||
Basic earnings per share | $ | — | $ | 0.05 | |||||||||
Basic weighted average shares outstanding | 27,111 | 31,982 | |||||||||||
Diluted earnings per share data: | |||||||||||||
Diluted earnings per share | $ | — | $ | 0.05 | |||||||||
Diluted weighted average shares outstanding | 27,175 | 32,013 | |||||||||||
(a) Percentages may not foot due to rounding. | |||||||||||||
Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Six Months Ended | |||||||||||||
July 30, 2016 | August 1, 2015 | ||||||||||||
Amount | % to Sales (a) | Amount | % to Sales (a) | ||||||||||
Net sales | $ | 671,135 | 100.0 | % | $ | 750,229 | 100.0 | % | |||||
Cost of sales and related buying, occupancy and distribution expenses | 518,578 | 77.3 | % | 570,845 | 76.1 | % | |||||||
Gross profit | 152,557 | 22.7 | % | 179,384 | 23.9 | % | |||||||
Selling, general and administrative expenses | 175,512 | 26.2 | % | 189,687 | 25.3 | % | |||||||
Interest expense | 2,221 | 0.3 | % | 1,252 | 0.2 | % | |||||||
Loss before income tax | (25,176 | ) | (3.8 | )% | (11,555 | ) | (1.5 | )% | |||||
Income tax benefit | (9,757 | ) | (1.5 | )% | (4,533 | ) | (0.6 | )% | |||||
Net loss | $ | (15,419 | ) | (2.3 | )% | $ | (7,022 | ) | (0.9 | )% | |||
Basic loss per share data: | |||||||||||||
Basic loss per share | $ | (0.57 | ) | $ | (0.22 | ) | |||||||
Basic weighted average shares outstanding | 27,021 | 31,866 | |||||||||||
Diluted loss per share data: | |||||||||||||
Diluted loss per share | $ | (0.57 | ) | $ | (0.22 | ) | |||||||
Diluted weighted average shares outstanding | 27,021 | 31,866 | |||||||||||
(a) Percentages may not foot due to rounding. | |||||||||||||
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
July 30, 2016 | January 30, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 20,878 | $ | 16,487 | |||
Merchandise inventories, net | 461,117 | 435,996 | |||||
Prepaid expenses and other current assets | 50,026 | 48,279 | |||||
Total current assets | 532,021 | 500,762 | |||||
Property, equipment and leasehold improvements, net | 324,144 | 311,717 | |||||
Intangible assets | 15,235 | 15,235 | |||||
Other non-current assets, net | 23,337 | 20,385 | |||||
Total assets | $ | 894,737 | $ | 848,099 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable | $ | 117,741 | $ | 84,019 | |||
Accrued expenses and other current liabilities | 69,215 | 71,863 | |||||
Total current liabilities | 186,956 | 155,882 | |||||
Long-term debt obligations | 199,838 | 162,876 | |||||
Other long-term liabilities | 98,939 | 99,588 | |||||
Total liabilities | 485,733 | 418,346 | |||||
Commitments and contingencies | |||||||
Common stock, par value $0.01, 100,000 shares authorized, 32,325 and 32,030 shares issued, respectively | 323 | 320 | |||||
Additional paid-in capital | 408,952 | 406,034 | |||||
Treasury stock, at cost, 5,175 shares, respectively | (43,276 | ) | (43,068 | ) | |||
Accumulated other comprehensive loss | (6,075 | ) | (6,353 | ) | |||
Retained earnings | 49,080 | 72,820 | |||||
Total stockholders' equity | 409,004 | 429,753 | |||||
Total liabilities and stockholders' equity | $ | 894,737 | $ | 848,099 | |||
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended | |||||||
July 30, 2016 | August 1, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (15,419 | ) | $ | (7,022 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, amortization and impairment of long-lived assets | 36,508 | 41,338 | |||||
Loss on retirements of property, equipment and leasehold improvements | 124 | 503 | |||||
Deferred income taxes | (1,404 | ) | (231 | ) | |||
Tax (deficiency) benefit from stock-based compensation | (3,230 | ) | 601 | ||||
Stock-based compensation expense | 6,552 | 5,929 | |||||
Amortization of debt issuance costs | 109 | 109 | |||||
Excess tax benefits from stock-based compensation | — | (944 | ) | ||||
Deferred compensation obligation | 208 | 129 | |||||
Amortization of employee benefit related costs | 448 | 387 | |||||
Construction allowances from landlords | 6,290 | 1,616 | |||||
Other changes in operating assets and liabilities: | |||||||
Increase in merchandise inventories | (25,121 | ) | (48,764 | ) | |||
Increase in other assets | (9,415 | ) | (6,529 | ) | |||
Increase in accounts payable and other liabilities | 34,069 | 25,983 | |||||
Net cash provided by operating activities | 29,719 | 13,105 | |||||
Cash flows from investing activities: | |||||||
Additions to property, equipment and leasehold improvements | (57,677 | ) | (35,572 | ) | |||
Proceeds from disposal of assets | 1,047 | 32 | |||||
Net cash used in investing activities | (56,630 | ) | (35,540 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility borrowings | 253,095 | 234,347 | |||||
Payments of revolving credit facility borrowings | (215,700 | ) | (192,484 | ) | |||
Proceeds from long-term debt obligation | 5,830 | — | |||||
Payments of long-term debt obligations | (2,785 | ) | (1,222 | ) | |||
Payments for stock related compensation | (817 | ) | (3,629 | ) | |||
Proceeds from issuance of stock awards | — | 543 | |||||
Excess tax benefits from stock-based compensation | — | 944 | |||||
Cash dividends paid | (8,321 | ) | (9,036 | ) | |||
Net cash provided by financing activities | 31,302 | 29,463 | |||||
Net increase in cash and cash equivalents | 4,391 | 7,028 | |||||
Cash and cash equivalents: | |||||||
Beginning of period | 16,487 | 17,165 | |||||
End of period | $ | 20,878 | $ | 24,193 | |||
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
July 30, 2016 | August 1, 2015 | July 30, 2016 | August 1, 2015 | ||||||||||||
Net income (loss) (GAAP) | $ | 41 | $ | 1,615 | $ | (15,419 | ) | $ | (7,022 | ) | |||||
Consolidation of corporate headquarters, net of tax of $3, $239, $43 and $239, respectively | (3 | ) | 389 | 67 | 389 | ||||||||||
Severance charges associated with workforce reduction, net of tax of $308, respectively | 486 | — | 486 | — | |||||||||||
Strategic store closures and other initiatives, net of tax of $211, $3,068, $369 and $3,293, respectively | 302 | 4,990 | 582 | 5,358 | |||||||||||
Adjusted net income (loss) (non-GAAP) | $ | 826 | $ | 6,994 | $ | (14,284 | ) | $ | (1,275 | ) | |||||
Diluted earnings (loss) per share (GAAP) | $ | — | $ | 0.05 | $ | (0.57 | ) | $ | (0.22 | ) | |||||
Consolidation of corporate headquarters | — | 0.01 | — | 0.01 | |||||||||||
Severance charges associated with workforce reduction | 0.02 | — | 0.02 | — | |||||||||||
Strategic store closures and other initiatives | 0.01 | 0.16 | 0.02 | 0.17 | |||||||||||
Adjusted diluted earnings (loss) per share (non-GAAP) | $ | 0.03 | $ | 0.22 | $ | (0.53 | ) | $ | (0.04 | ) | |||||
Three Months Ended | |||||||||||||
July 30, 2016 | August 1, 2015 | ||||||||||||
Amount | % to Sales (a) | Amount | % to Sales (a) | ||||||||||
Gross profit (GAAP) | $ | 85,570 | 25.3 | % | $ | 98,455 | 25.8 | % | |||||
Strategic store closures | 231 | — | % | 8,058 | 2.1 | % | |||||||
Adjusted gross profit (non-GAAP) | $ | 85,801 | 25.4 | % | $ | 106,513 | 28.0 | % | |||||
Selling, general and administrative expenses (GAAP) | $ | 85,368 | 25.2 | % | $ | 95,212 | 25.0 | % | |||||
Consolidation of corporate headquarters | — | — | % | (628 | ) | (0.2 | )% | ||||||
Severance charges associated with workforce reduction | (794 | ) | (0.2 | )% | — | — | % | ||||||
Strategic store closures | (282 | ) | (0.1 | )% | — | — | % | ||||||
Adjusted selling, general and administrative expenses (non-GAAP) | $ | 84,292 | 24.9 | % | $ | 94,584 | 24.8 | % | |||||
(a) Percentages may not foot due to rounding. | |||||||||||||
2016 Guidance Range | |||||||
Low | High | ||||||
Diluted earnings per share (GAAP) | $ | 0.15 | - | $ | 0.35 | ||
Consolidation of corporate headquarters, severance charges associated with workforce reduction and strategic store closures | 0.05 | - | 0.05 | ||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.20 | - | $ | 0.40 | ||