Stage Stores, Inc. SSI today reported financial results for the third quarter ended October 28, 2017. For the third quarter, comparable sales declined 3.9%. Net loss for the quarter was $17.7 million, or a $0.64 loss per diluted share, including an estimated negative impact of $0.05 per diluted share from Hurricanes Harvey and Irma.
"Despite the disruption of Hurricanes Harvey and Irma, we returned to positive comparable sales in October, regaining our momentum from the second quarter," said Michael Glazer, President and Chief Executive Officer. "We estimate that the hurricanes negatively impacted total sales by $3.8 million or 1.1%. Our immediate response to the disaster was to provide aid to our affected guests and associates, many of whom suffered tremendous losses as a result of the storms. The Company, our associates, our guests, and our vendors provided much needed assistance through generous donations of cash, merchandise, and supplies to the communities we serve. I am humbled by the overwhelming response and generosity that we have experienced during this difficult time.
"Throughout the third quarter, we continued to make progress on our key initiatives across merchandising, marketing, and operations. Notably, we achieved another quarter of double digit growth in e-commerce as we remained focused on enhancing our omni-channel business. We ended the quarter with department store inventory down 8.7%, which helped contribute to a 260 basis point merchandise margin improvement, positioning us for a successful holiday season," continued Mr. Glazer. "In the fourth quarter, we will capitalize on the momentum in our department stores by focusing on trending categories like cosmetics, gifts, and active, reissuing our private label credit cards, and shifting more of our marketing efforts to digital. In our Gordmans stores, our inventory is well positioned for the fourth quarter, and we are excited to launch our first marketing campaign that announces our presence in the off-price industry as we head into the holiday season. As we execute these strategies, our team remains focused on generating positive free cash flow and enhancing shareholder value through our dividend."
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 December 13, 2017 to shareholders of record at the close of business on November 28, 2017.
Third Quarter Reported Results
For the third quarter, comparable sales decreased 3.9%. Total sales increased 12.6% to $357.2 million, as compared to $317.1 million in the prior year. Net loss was $17.7 million, or $0.64 per diluted share, compared to a net loss of $15.6 million, or $0.58 per diluted share, for the prior year third quarter. Excluding after-tax charges related to store closures and other strategic initiatives of approximately $0.2 million, or $0.01 per diluted share, third quarter 2016 adjusted net loss was $15.5 million, or $0.57 per diluted share.
2017 Guidance
The Company has narrowed its guidance range for 2017. Adjusted loss per diluted share is now expected to be between $0.90 and $1.25, compared to the prior guidance of an adjusted loss of $0.90 to $1.35. Updated 2017 guidance assumes comparable sales are in a range of -4% to -6%, compared to the prior guidance of -4% to -7%, and excludes after-tax charges associated with the Gordmans acquisition, store closures, and other totaling approximately $0.23 per diluted share. Weighted average shares for the year are expected to be approximately 27.5 million. The effective tax rate is now projected to be between 35% and 37%. Capital expenditures in 2017, net of construction allowances from landlords, are expected to be $40 million, compared to $67 million in 2016.
Conference Call / Webcast Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its results. Interested parties may participate in the Company's conference call by dialing 844-415-6993. Alternatively, interested parties may listen to a live webcast of the conference call through the Investor Relations section of the Company's website (corporate.stage.com) under the "Webcasts" caption. A replay of the conference call will be available online until midnight on Friday, December 1, 2017.
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 November 16, 2017, the Company operates in 42 states through 789 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES, and STAGE specialty department stores and 58 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 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)
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Stage Stores, Inc. |
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Condensed Consolidated Statements of Operations |
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(in thousands, except per share data) |
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(Unaudited) |
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| Three Months Ended | ||||||||||||||
| October 28, 2017 | October 29, 2016 | |||||||||||||
| Amount | % to Sales (a) | Amount | % to Sales (a) | |||||||||||
| Net sales | $ | 357,236 | 100.0 | % | $ | 317,140 | 100.0 | % | ||||||
| Cost of sales and related buying, occupancy and distribution expenses | 285,542 | 79.9 | % | 260,550 | 82.2 | % | ||||||||
| Gross profit | 71,694 | 20.1 | % | 56,590 | 17.8 | % | ||||||||
| Selling, general and administrative expenses | 100,036 | 28.0 | % | 84,564 | 26.7 | % | ||||||||
| Interest expense | 2,001 | 0.6 | % | 1,395 | 0.4 | % | ||||||||
| Loss before income tax | (30,343 | ) | (8.5 | )% | (29,369 | ) | (9.3 | )% | ||||||
| Income tax benefit | (12,621 | ) | (3.5 | )% | (13,735 | ) | (4.3 | )% | ||||||
| Net loss | $ | (17,722 | ) | (5.0 | )% | $ | (15,634 | ) | (4.9 | )% | ||||
| Basic loss per share data: | ||||||||||||||
| Basic loss per share | $ | (0.64 | ) | $ | (0.58 | ) | ||||||||
| Basic weighted average shares outstanding | 27,602 | 27,155 | ||||||||||||
| Diluted loss per share data: | ||||||||||||||
| Diluted loss per share | $ | (0.64 | ) | $ | (0.58 | ) | ||||||||
| Diluted weighted average shares outstanding | 27,602 | 27,155 | ||||||||||||
| (a) Percentages may not foot due to rounding. | ||||||||||||||
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Stage Stores, Inc. |
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Condensed Consolidated Statements of Operations |
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(in thousands, except per share data) |
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(Unaudited) |
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| Nine Months Ended | ||||||||||||||
| October 28, 2017 | October 29, 2016 | |||||||||||||
| Amount | % to Sales (a) | Amount | % to Sales (a) | |||||||||||
| Net sales | $ | 1,042,924 | 100.0 | % | $ | 988,275 | 100.0 | % | ||||||
| Cost of sales and related buying, occupancy and distribution expenses | 816,071 | 78.2 | % | 779,128 | 78.8 | % | ||||||||
| Gross profit | 226,853 | 21.8 | % | 209,147 | 21.2 | % | ||||||||
| Selling, general and administrative expenses | 289,188 | 27.7 | % | 260,076 | 26.3 | % | ||||||||
| Interest expense | 5,505 | 0.5 | % | 3,616 | 0.4 | % | ||||||||
| Loss before income tax | (67,840 | ) | (6.5 | )% | (54,545 | ) | (5.5 | )% | ||||||
| Income tax benefit | (24,873 | ) | (2.4 | )% | (23,492 | ) | (2.4 | )% | ||||||
| Net loss | $ | (42,967 | ) | (4.1 | )% | $ | (31,053 | ) | (3.1 | )% | ||||
| Basic loss per share data: | ||||||||||||||
| Basic loss per share | $ | (1.57 | ) | $ | (1.15 | ) | ||||||||
| Basic weighted average shares outstanding | 27,468 | 27,066 | ||||||||||||
| Diluted loss per share data: | ||||||||||||||
| Diluted loss per share | $ | (1.57 | ) | $ | (1.15 | ) | ||||||||
| Diluted weighted average shares outstanding | 27,468 | 27,066 | ||||||||||||
| (a) Percentages may not foot due to rounding. | ||||||||||||||
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Stage Stores, Inc. |
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Condensed Consolidated Balance Sheets |
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(in thousands, except par value) |
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(Unaudited) |
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| October 28, 2017 | January 28, 2017 | |||||||
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ASSETS |
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| Cash and cash equivalents | $ | 30,330 | $ | 13,803 | ||||
| Merchandise inventories, net | 578,633 | 409,384 | ||||||
| Prepaid expenses and other current assets | 52,376 | 41,574 | ||||||
| Total current assets | 661,339 | 464,761 | ||||||
| Property, equipment and leasehold improvements, net | 260,870 | 284,110 | ||||||
| Intangible assets | 17,135 | 15,235 | ||||||
| Other non-current assets, net | 28,237 | 22,883 | ||||||
| Total assets | $ | 967,581 | $ | 786,989 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Accounts payable | $ | 214,783 | $ | 101,985 | ||||
| Accrued expenses and other current liabilities | 77,093 | 66,685 | ||||||
| Total current liabilities | 291,876 | 168,670 | ||||||
| Long-term debt obligations | 268,969 | 163,749 | ||||||
| Other long-term liabilities | 70,052 | 74,410 | ||||||
| Total liabilities | 630,897 | 406,829 | ||||||
| Commitments and contingencies | ||||||||
| Common stock, par value $0.01, 100,000 shares authorized, 32,794 and 32,340 shares issued, respectively | 328 | 323 | ||||||
| Additional paid-in capital | 416,422 | 410,504 | ||||||
| Treasury stock, at cost, 5,175 shares, respectively | (43,248 | ) | (43,286 | ) | ||||
| Accumulated other comprehensive loss | (5,021 | ) | (5,648 | ) | ||||
| (Accumulated deficit) retained earnings | (31,797 | ) | 18,267 | |||||
| Total stockholders' equity | 336,684 | 380,160 | ||||||
| Total liabilities and stockholders' equity | $ | 967,581 | $ | 786,989 | ||||
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Stage Stores, Inc. |
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Condensed Consolidated Statements of Cash Flows |
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(in thousands) |
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(Unaudited) |
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| Nine Months Ended | ||||||||
| October 28, 2017 | October 29, 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (42,967 | ) | $ | (31,053 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Depreciation, amortization and impairment of long-lived assets | 49,476 | 54,285 | ||||||
| (Gain) loss on retirements of property, equipment and leasehold improvements | (926 | ) | 273 | |||||
| Deferred income taxes | (6,065 | ) | 1,965 | |||||
| Tax deficiency from stock-based compensation | — | (3,295 | ) | |||||
| Stock-based compensation expense | 6,191 | 7,345 | ||||||
| Amortization of debt issuance costs | 216 | 164 | ||||||
| Deferred compensation obligation | (38 | ) | 233 | |||||
| Amortization of employee benefit related costs and loss on pension settlement | 1,011 | 673 | ||||||
| Construction allowances from landlords | 1,228 | 6,994 | ||||||
| Other changes in operating assets and liabilities: | ||||||||
| Increase in merchandise inventories | (137,479 | ) | (133,347 | ) | ||||
| Increase in other assets | (9,709 | ) | (18,527 | ) | ||||
| Increase in accounts payable and other liabilities | 120,137 | 119,544 | ||||||
| Net cash (used in) provided by operating activities | (18,925 | ) | 5,254 | |||||
| Cash flows from investing activities: | ||||||||
| Additions to property, equipment and leasehold improvements | (25,342 | ) | (67,934 | ) | ||||
| Proceeds from insurance and disposal of assets | 2,404 | 1,177 | ||||||
| Business acquisition | (36,144 | ) | — | |||||
| Net cash used in investing activities | (59,082 | ) | (66,757 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facility borrowings | 426,308 | 389,701 | ||||||
| Payments of revolving credit facility borrowings | (318,851 | ) | (314,783 | ) | ||||
| Proceeds from long-term debt obligation | — | 5,830 | ||||||
| Payments of long-term debt obligations | (5,626 | ) | (3,507 | ) | ||||
| Payments of debt issuance costs | (8 | ) | — | |||||
| Payments for stock related compensation | (192 | ) | (857 | ) | ||||
| Cash dividends paid | (7,097 | ) | (12,466 | ) | ||||
| Net cash provided by financing activities | 94,534 | 63,918 | ||||||
| Net increase in cash and cash equivalents | 16,527 | 2,415 | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of period | 13,803 | 16,487 | ||||||
| End of period | $ | 30,330 | $ | 18,902 | ||||
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Stage Stores, Inc. |
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Reconciliation of Non-GAAP Financial Measures |
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(in thousands, except earnings per share) |
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(Unaudited) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||
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October 28, |
October 29, |
October 28, |
October 29, |
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| Net loss (GAAP) | $ | (17,722 | ) | $ | (15,634 | ) | $ | (42,967 | ) | $ | (31,053 | ) | ||||
| Business acquisition costs (pretax) | (39 | ) | — | 9,169 | — | |||||||||||
| Store closures, impairments and other (pretax) | 552 | 443 | 1,333 | 1,394 | ||||||||||||
| Consolidation of corporate headquarters and severance charges associated with workforce reduction (pretax) | — | — | — | 904 | ||||||||||||
| Income tax impact | (370 | ) | (271 | ) | (4,176 | ) | (989 | ) | ||||||||
| Adjusted net loss (non-GAAP) | $ | (17,579 | ) | $ | (15,462 | ) | $ | (36,641 | ) | $ | (29,744 | ) | ||||
| Diluted loss per share (GAAP) | $ | (0.64 | ) | $ | (0.58 | ) | $ | (1.57 | ) | $ | (1.15 | ) | ||||
| Business acquisition costs (pretax) | — | — | 0.33 | — | ||||||||||||
| Store closures, impairments and other (pretax) | 0.02 | 0.02 | 0.05 | 0.05 | ||||||||||||
| Consolidation of corporate headquarters and severance charges associated with workforce reduction (pretax) | — | — | — | 0.03 | ||||||||||||
| Income tax impact | (0.02 | ) | (0.01 | ) | (0.15 | ) | (0.03 | ) | ||||||||
| Adjusted diluted loss per share (non-GAAP) | $ | (0.64 | ) | $ | (0.57 | ) | $ | (1.34 | ) | $ | (1.10 | ) | ||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
October 28, |
October 29, |
October 28, |
October 29, |
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| Gross profit (GAAP) | $ | 71,694 | $ | 56,590 | $ | 226,853 | $ | 209,147 | ||||||||
| Store closures and impairments | 70 | — | 583 | 231 | ||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 71,764 | $ | 56,590 | $ | 227,436 | $ | 209,378 | ||||||||
| Selling, general and administrative expenses (GAAP) | $ | 100,036 | $ | 84,564 | $ | 289,188 | $ | 260,076 | ||||||||
| Business acquisition costs | 39 | — | (9,169 | ) | — | |||||||||||
| Store closures and other | (482 | ) | (443 | ) | (750 | ) | (1,163 | ) | ||||||||
| Consolidation of corporate headquarters and severance charges associated with workforce reduction | — | — | — | (904 | ) | |||||||||||
| Adjusted selling, general and administrative expenses (non-GAAP) | $ | 99,593 | $ | 84,121 | $ | 279,269 | $ | 258,009 | ||||||||
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Stage Stores, Inc. |
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Reconciliation of Non-GAAP Financial Measures (continued) |
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(in thousands, except earnings per share) |
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(Unaudited) |
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| 2017 Guidance Range | ||||||||
| Low | High | |||||||
| Diluted loss per share (GAAP) | $ | (1.48 | ) | $ | (1.13 | ) | ||
| Business acquisition costs (pretax) | 0.33 | 0.33 | ||||||
| Store closures, impairments and other (pretax) | 0.05 | 0.05 | ||||||
| Income tax impact | (0.15 | ) | (0.15 | ) | ||||
| Adjusted diluted loss per share (non-GAAP) | $ | (1.25 | ) | $ | (0.90 | ) | ||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171116005394/en/
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