Market Overview

Stage Stores Reports First Quarter Results and Declares Quarterly Cash Dividend


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 (
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
For more information about Stage Stores, visit the company's website at

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)


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)


  May 5,   February 3,   April 29,
2018 2018 2017


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  


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)


  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
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


The following table reconciles EBIT, a non-GAAP financial measure,
to the most directly comparable GAAP measure, net loss (amounts in

  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
        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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