HOUSTON--(BUSINESS WIRE)--Stage Stores, Inc. (NYSE:SSI) today reported financial results for the third quarter ended October 29, 2016 and lowered guidance for the fiscal year.
The Company also announced that its Board of Directors declared a quarterly cash dividend of 15 cents per share on the Company’s common stock, payable on December 14, 2016 to shareholders of record at the close of business on November 29, 2016.
“Our third quarter results remained challenged by a difficult retail environment, unseasonably warm weather, the weak peso, and ongoing pressure in Texas, Oklahoma, Louisiana, and New Mexico from depressed oil prices,” said Michael Glazer, President and Chief Executive Officer. “As a result, we increased clearance sales to position inventory levels for the important fourth quarter. We have enhanced our assortments, heightened our promotions, and created a more engaging customer experience online and in stores to drive sales during the holiday season. We are pleased to announce our quarterly dividend and we remain committed to generating positive free cash flow and delivering value to our shareholders.”
Third Quarter Results
For the third quarter, comparable sales decreased 8.2%. Total sales decreased 9.8% to $317.1 million, as compared to $351.6 million in the third quarter of the prior year. The Company’s third quarter net loss was $15.6 million, or $0.58 per diluted share, versus a $0.32 loss per diluted share during the same period in the prior year.
On an adjusted basis, the Company incurred a third quarter net loss of $15.5 million, or $0.57 per diluted share, versus a $0.29 loss per diluted share during the same period in the prior year. Adjusted results exclude charges related to the consolidation of the Company’s corporate headquarters, severance associated with workforce reductions, and strategic store closures, which adjustments totaled approximately $0.2 million after tax, or $0.01 per diluted share, in the third quarter of 2016.
Guidance
The Company anticipates fourth quarter comparable sales to be in the range of -2% to -6% and earnings per diluted share to be between $0.65 and $0.90. Weighted average diluted shares for the fourth quarter are expected to be 28.3 million.
The Company lowered its guidance for the fiscal year with comparable sales expected to be in the range of -7% to -8% and adjusted loss per share to be between $0.15 and $0.40. Weighted average shares for the year are expected to be 27.1 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 third 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, December 2, 2016.
About Stage Stores
Stage Stores operates 820 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.
|
Stage Stores, Inc. |
||||||||||||||||
|
Condensed Consolidated Statements of Operations |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three Months Ended | ||||||||||||||||
| October 29, 2016 | October 31, 2015 | |||||||||||||||
| Amount | % to Sales (a) | Amount | % to Sales (a) | |||||||||||||
| Net sales | $ | 317,140 | 100.0 | % | $ | 351,575 | 100.0 | % | ||||||||
| Cost of sales and related buying, occupancy and distribution expenses | 260,550 | 82.2 | % | 275,479 | 78.4 | % | ||||||||||
| Gross profit | 56,590 | 17.8 | % | 76,096 | 21.6 | % | ||||||||||
| Selling, general and administrative expenses | 84,564 | 26.7 | % | 92,096 | 26.2 | % | ||||||||||
| Interest expense | 1,395 | 0.4 | % | 743 | 0.2 | % | ||||||||||
| Loss before income tax | (29,369 | ) | (9.3 |
) |
% |
(16,743 | ) | (4.8 |
) |
% |
||||||
| Income tax benefit | (13,735 | ) | (4.3 |
) |
% |
(6,560 | ) | (1.9 |
) |
% |
||||||
| Net loss | $ | (15,634 | ) | (4.9 |
) |
% |
$ | (10,183 | ) | (2.9 |
) |
% |
||||
| Basic loss per share data: | ||||||||||||||||
| Basic loss per share | $ | (0.58 | ) | $ | (0.32 | ) | ||||||||||
| Basic weighted average shares outstanding | 27,155 | 32,017 | ||||||||||||||
| Diluted loss per share data: | ||||||||||||||||
| Diluted loss per share | $ | (0.58 | ) | $ | (0.32 | ) | ||||||||||
| Diluted weighted average shares outstanding | 27,155 | 32,017 | ||||||||||||||
| (a) Percentages may not foot due to rounding. | ||||||||||||||||
|
Stage Stores, Inc. |
||||||||||||||||
|
Condensed Consolidated Statements of Operations |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
|
Nine Months Ended | |||||||||||||||
| October 29, 2016 | October 31, 2015 | |||||||||||||||
| Amount | % to Sales (a) | Amount | % to Sales (a) | |||||||||||||
| Net sales | $ | 988,275 | 100.0 | % | $ | 1,101,804 | 100.0 | % | ||||||||
| Cost of sales and related buying, occupancy and distribution expenses | 779,128 | 78.8 | % | 846,324 | 76.8 | % | ||||||||||
| Gross profit | 209,147 | 21.2 | % | 255,480 | 23.2 | % | ||||||||||
| Selling, general and administrative expenses | 260,076 | 26.3 | % | 281,783 | 25.6 | % | ||||||||||
| Interest expense | 3,616 | 0.4 | % | 1,995 | 0.2 | % | ||||||||||
| Loss before income tax | (54,545 | ) | (5.5 |
) |
% |
(28,298 | ) | (2.6 |
) |
% |
||||||
| Income tax benefit | (23,492 | ) | (2.4 |
) |
% |
(11,093 | ) | (1.0 |
) |
% |
||||||
| Net loss | $ | (31,053 | ) | (3.1 |
) |
% |
$ | (17,205 | ) | (1.6 |
) |
% |
||||
| Basic loss per share data: | ||||||||||||||||
| Basic loss per share | $ | (1.15 | ) | $ | (0.54 | ) | ||||||||||
| Basic weighted average shares outstanding | 27,066 | 31,917 | ||||||||||||||
| Diluted loss per share data: | ||||||||||||||||
| Diluted loss per share | $ | (1.15 | ) | $ | (0.54 | ) | ||||||||||
| Diluted weighted average shares outstanding | 27,066 | 31,917 | ||||||||||||||
| (a) Percentages may not foot due to rounding. | ||||||||||||||||
|
Stage Stores, Inc. |
||||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
(in thousands, except par value) |
||||||||
|
(Unaudited) |
||||||||
| October 29, 2016 | January 30, 2016 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 18,902 | $ | 16,487 | ||||
| Merchandise inventories, net | 569,343 | 435,996 | ||||||
| Prepaid expenses and other current assets | 60,283 | 48,279 | ||||||
| Total current assets | 648,528 | 500,762 | ||||||
| Property, equipment and leasehold improvements, net | 315,865 | 311,717 | ||||||
| Intangible assets | 15,235 | 15,235 | ||||||
| Other non-current assets, net | 22,711 | 20,385 | ||||||
| Total assets | $ | 1,002,339 | $ | 848,099 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Accounts payable | $ | 210,995 | $ | 84,019 | ||||
| Accrued expenses and other current liabilities | 64,126 | 71,863 | ||||||
| Total current liabilities | 275,121 | 155,882 | ||||||
| Long-term debt obligations | 236,592 | 162,876 | ||||||
| Other long-term liabilities | 100,549 | 99,588 | ||||||
| Total liabilities | 612,262 | 418,346 | ||||||
| Commitments and contingencies | ||||||||
| Common stock, par value $0.01, 100,000 shares authorized, 32,331 and 32,030 shares issued, respectively | 323 | 320 | ||||||
| Additional paid-in capital | 409,690 | 406,034 | ||||||
| Treasury stock, at cost, 5,175 shares, respectively | (43,301 | ) | (43,068 | ) | ||||
| Accumulated other comprehensive loss | (5,936 | ) | (6,353 | ) | ||||
| Retained earnings | 29,301 | 72,820 | ||||||
| Total stockholders' equity | 390,077 | 429,753 | ||||||
| Total liabilities and stockholders' equity | $ | 1,002,339 | $ | 848,099 | ||||
|
Stage Stores, Inc. |
||||||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
(in thousands) |
||||||||
|
(Unaudited) |
||||||||
| Nine Months Ended | ||||||||
| October 29, 2016 | October 31, 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (31,053 | ) | $ | (17,205 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, amortization and impairment of long-lived assets | 54,285 | 58,326 | ||||||
| Loss on retirements of property, equipment and leasehold improvements | 273 | 712 | ||||||
| Deferred income taxes | 1,965 | (557 | ) | |||||
| Tax (deficiency) benefit from stock-based compensation | (3,295 | ) | 540 | |||||
| Stock-based compensation expense | 7,345 | 8,926 | ||||||
| Amortization of debt issuance costs | 164 | 164 | ||||||
| Excess tax benefits from stock-based compensation | — | (945 | ) | |||||
| Deferred compensation obligation | 233 | 163 | ||||||
| Amortization of employee benefit related costs | 673 | 581 | ||||||
| Construction allowances from landlords | 6,994 | 2,127 | ||||||
| Other changes in operating assets and liabilities: | ||||||||
| Increase in merchandise inventories | (133,347 | ) | (175,806 | ) | ||||
| Increase in other assets | (18,527 | ) | (3,335 | ) | ||||
| Increase in accounts payable and other liabilities | 119,544 | 95,476 | ||||||
| Net cash provided by (used in) operating activities | 5,254 | (30,833 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Additions to property, equipment and leasehold improvements | (67,934 | ) | (69,156 | ) | ||||
| Proceeds from disposal of assets | 1,177 | 37 | ||||||
| Net cash used in investing activities | (66,757 | ) | (69,119 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facility borrowings | 389,701 | 428,783 | ||||||
| Payments of revolving credit facility borrowings | (314,783 | ) | (304,960 | ) | ||||
| Proceeds from long-term debt obligation | 5,830 | — | ||||||
| Payments of long-term debt obligations | (3,507 | ) | (1,466 | ) | ||||
| Payments for stock related compensation | (857 | ) | (3,708 | ) | ||||
| Proceeds from issuance of stock awards | — | 543 | ||||||
| Excess tax benefits from stock-based compensation | — | 945 | ||||||
| Cash dividends paid | (12,466 | ) | (13,916 | ) | ||||
| Net cash provided by financing activities | 63,918 | 106,221 | ||||||
| Net increase in cash and cash equivalents | 2,415 | 6,269 | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | 16,487 | 17,165 | ||||||
| End of period | $ | 18,902 | $ | 23,434 | ||||
|
Stage Stores, Inc. |
||||||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||
|
(in thousands, except earnings per share) |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | |||||||||||||
| Net loss (GAAP) | $ | (15,634 | ) | $ | (10,183 | ) | $ | (31,053 | ) | $ | (17,205 | ) | ||||
| Consolidation of corporate headquarters (pretax) | — | 1,313 | 110 | 1,941 | ||||||||||||
| Severance charges associated with workforce reduction (pretax) | — | — | 794 | — | ||||||||||||
| Strategic store closures and other initiatives (pretax) | 443 | 183 | 1,394 | 8,834 | ||||||||||||
| Income tax impact | $ | (271 | ) | $ | (692 | ) | $ | (989 | ) | $ | (4,224 | ) | ||||
| Adjusted net loss (non-GAAP) | $ | (15,462 | ) | $ | (9,379 | ) | $ | (29,744 | ) | $ | (10,654 | ) | ||||
| Diluted loss per share (GAAP) | $ | (0.58 | ) | $ | (0.32 | ) | $ | (1.15 | ) | $ | (0.54 | ) | ||||
| Consolidation of corporate headquarters (pretax) | — | 0.04 | — | 0.06 | ||||||||||||
| Severance charges associated with workforce reduction (pretax) | — | — | 0.03 | — | ||||||||||||
| Strategic store closures and other initiatives (pretax) | 0.02 | 0.01 | 0.05 | 0.28 | ||||||||||||
| Income tax impact | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.13 | ) | ||||
| Adjusted diluted loss per share (non-GAAP) | $ | (0.57 | ) | $ | (0.29 | ) | $ | (1.10 | ) | $ | (0.33 | ) | ||||
| Three Months Ended | ||||||||||||||||
| October 29, 2016 | October 31, 2015 | |||||||||||||||
| Amount | % to Sales (a) | Amount | % to Sales (a) | |||||||||||||
| Selling, general and administrative expenses (GAAP) | $ | 84,564 | 26.7 | % | $ | 92,096 | 26.2 | % | ||||||||
| Consolidation of corporate headquarters | — | — | % | (1,313 | ) | (0.4 |
) |
% |
||||||||
| Strategic store closures | (443 | ) | (0.1 |
) |
% |
(183 | ) | (0.1 |
) |
% |
||||||
| Adjusted selling, general and administrative expenses (non-GAAP) | $ | 84,121 | 26.5 | % | $ | 90,600 | 25.8 | % | ||||||||
| (a) Percentages may not foot due to rounding. | ||||||||||||||||
| 2016 Guidance Range | ||||||||
| Low | High | |||||||
| Diluted loss per share (GAAP) | $ | (0.45 | ) | $ | (0.20 | ) | ||
| Consolidation of corporate headquarters, severance charges associated with workforce reduction and strategic store closures | 0.05 | 0.05 | ||||||
| Adjusted diluted loss per share (non-GAAP) | $ | (0.40 | ) | $ | (0.15 | ) | ||