STAGE STORES INC - FORM 8-K - EX-99 - EXHIBIT - May 20, 2014

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NEWS RELEASE

CONTACT:                    
Bob Aronson                    
Vice President, Investor Relations            
800-579-2302                
(baronson@stagestores.com)

                        

Stage Stores Reports First Quarter Results
                        
HOUSTON, TX, May 20, 2014 -- Stage Stores, Inc. (NYSE: SSI) today reported financial results for the first quarter ended May 3, 2014.

Total sales from continuing operations for the first quarter were $372 million. Comparable store sales for the quarter decreased 0.2%. The Company noted that its cosmetics, children’s, misses sportswear and footwear categories all had comparable store sales increases for the quarter. Geographically, the Northwest, Southwest and Southeast regions all outperformed.

The Company reported a loss for the quarter from continuing operations of $12.0 million, or $0.38 per share. Results from continuing operations exclude the sale of the Steele’s division that was completed on March 7, 2014.

Commenting on the Company’s first quarter results, Michael Glazer, President and Chief Executive Officer, stated, “Comparable store sales were flat in a volatile first quarter, marked by a highly promotional retail environment and unseasonable weather. Our results were also impacted by our sales mix for the quarter, which was heavily weighted with clearance goods. While this hurt our gross margin, we feel very good about our inventory content heading into the rest of the year."

Reported Results
Including discontinued operations, the Company reported a net loss for this year’s first quarter of $18.8 million, or $0.60 per share. For last year’s first quarter, including discontinued operations and one-time items, the Company reported a net loss of $6.9 million, or $0.21 per share. One-time items recorded in the prior year were associated with the consolidation of the Company’s South Hill, Virginia operations into its Houston headquarters and totaled approximately $9.7 million, or $0.19 per share.
 



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Stage Stores Reports
First Quarter Results
Page - 2


Full Year 2014 Guidance
The Company is maintaining its comparable store sales guidance range for the year of flat to up 2%, as well as its EPS guidance range from continuing operations of $1.25 to $1.35.

 
 
FY 2014 OUTLOOK*
 
FY 2013*
Sales ($mm)

 
$1,640
—
$1,670
 
$1,610
 
 
 
 
 
 
 
Adjusted EPS
 
$1.25
—
$1.35
 
1.22**
 
 
 
 
 
 
 
Diluted Shares (m)
 
32,300
 
32,311

            *From continuing operations.
        **Adjusted to exclude one-time items.

Store Activity
The Company reported that it opened seven new stores and closed two stores during the first quarter. Bealls stores were opened in Truth or Consequences, NM and Carson City and Fallon, NV; Goody’s stores were opened in Beaver Dam, KY and Sylacauga, AL; and Peebles stores were opened in Wadsworth, OH and Waynesburg, PA. The Company also installed 13 Estee Lauder and 13 Clinique counters during the quarter.

Conference Call Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its first quarter results. Interested parties can participate in the Company’s conference call by dialing 703-639-1319. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestoresinc.com and then clicking on Investor Relations, then Webcasts and then the webcast link. A replay of the conference call will be available online until midnight on Friday, May 30, 2014.

About Stage Stores
Stage Stores, Inc. operates primarily in small and mid-sized towns and communities. Its stores, which operate under the Bealls, Goody’s, Palais Royal, Peebles and Stage names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company currently operates 853 stores in 40 states. The Company also has an eCommerce website. For more information about Stage Stores, visit the Company’s web site at www.stagestoresinc.com.


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Stage Stores Reports
First Quarter Results
Page -3


Caution Concerning Forward-Looking Statements
This document contains “forward-looking statements”. Forward-looking statements reflect our expectations regarding future events and operating performance and often contain words such as "believe", "expect", "may", "will", "should", "could", "anticipate", "plan" or similar words. In this document, forward-looking statements include comments regarding the Company’s sales, comparable store sales, EPS and diluted share count outlooks for the 2014 fiscal year. Forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC") on April 2, 2014, and other factors as may periodically be described in our other filings with the SEC. Forward-looking statements speak only as of the date of this document. We do not undertake to update our forward-looking statements.


(Tables to Follow)





Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

 
Thirteen Weeks Ended
 
May 3, 2014
 
May 4, 2013
 
Amount
 
% to Sales (1)
 
Amount
 
% to Sales (1)
 
 
 
 
 
 
 
 
Net sales
$
372,040

 
100.0
 %
 
$
372,103

 
100.0
 %
Cost of sales and related buying, occupancy and distribution expenses
294,099

 
79.1
 %
 
282,474

 
75.9
 %
Gross profit
77,941

 
20.9
 %
 
89,629

 
24.1
 %
Selling, general and administrative expenses
96,054

 
25.8
 %
 
97,947

 
26.3
 %
Store opening costs
808

 
0.2
 %
 
975

 
0.3
 %
Interest expense
724

 
0.2
 %
 
586

 
0.2
 %
Loss from continuing operations before income tax
(19,645
)
 
(5.3
)%
 
(9,879
)
 
(2.7
)%
Income tax benefit
(7,599
)
 
(2.0
)%
 
(3,691
)
 
(1.0
)%
Loss from continuing operations
(12,046
)
 
(3.2
)%
 
(6,188
)
 
(1.7
)%
Loss from discontinued operations, net of tax benefit of $4,257 and $398, respectively
(6,748
)
 
(1.8
)%
 
(668
)
 
(0.2
)%
Net loss
$
(18,794
)
 
(5.1
)%
 
$
(6,856
)
 
(1.8
)%
 
 
 
 
 
 
 
 
Basic loss per share data:
 

 
 
 
 
 
 
Continuing operations
$
(0.38
)
 
 
 
$
(0.19
)
 
 
Discontinued operations
(0.22
)
 
 
 
(0.02
)
 
 
Basic loss per share
$
(0.60
)
 
 
 
$
(0.21
)
 
 
Basic weighted average shares outstanding
31,492

 
 
 
32,306

 
 
 
 
 
 
 
 
 
 
Diluted loss per share data:
 
 
 
 
 
 
 
Continuing operations
$
(0.38
)
 
 
 
$
(0.19
)
 
 
Discontinued operations
(0.22
)
 
 
 
(0.02
)
 
 
Diluted loss per share
$
(0.60
)
 
 
 
$
(0.21
)
 
 
Diluted weighted average shares outstanding
31,492

 
 
 
32,306

 
 
 
 
 
 
 
 
 
 
(1) Percentages may not foot due to rounding.
 
 
 
 
 
 















Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)

 
May 3, 2014
 
February 1, 2014
ASSETS
 
 
 
Cash and cash equivalents
$
24,361

 
$
14,762

Merchandise inventories, net
449,547

 
434,407

Prepaid expenses and other current assets
47,526

 
40,082

Total current assets
521,434


489,251

 
 
 
 
Property, equipment and leasehold improvements, net
281,936

 
282,534

Intangible asset
14,910

 
14,910

Other non-current assets, net
25,166

 
24,142

Total assets
$
843,446


$
810,837

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Accounts payable
$
147,651

 
$
125,707

Accrued expenses and other current liabilities
68,658

 
69,549

Total current liabilities
216,309

 
195,256

 
 
 
 
Long-term debt obligations
90,208

 
60,871

Other long-term liabilities
100,170

 
100,266

Total liabilities
406,687

 
356,393

 
 
 
 
Commitments and contingencies
—

 
—

 
 
 
 
Common stock, par value $0.01, 100,000 shares authorized, 31,721 and 31,222 shares issued, respectively
317

 
312

Additional paid-in capital
389,327

 
384,295

Less treasury stock - at cost, 0 and 0 shares, respectively
(1,005
)
 
(967
)
Accumulated other comprehensive loss
(4,554
)
 
(4,616
)
Retained earnings
52,674

 
75,420

Total stockholders' equity
436,759

 
454,444

Total liabilities and stockholders' equity
$
843,446

 
$
810,837

 
 
 
 















Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Thirteen Weeks Ended
 
May 3, 2014
 
May 4, 2013
Cash flows from operating activities:
 
 
 
Net loss
$
(18,794
)
 
$
(6,856
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 

Depreciation and amortization and impairment of long-lived assets
15,218

 
15,047

Loss on retirements of property and equipment
677

 
186

Deferred income taxes
(420
)
 
(428
)
Tax benefit from stock-based compensation
280

 
1,597

Stock-based compensation expense
1,626

 
1,979

Amortization of debt issuance costs
75

 
64

Excess tax benefits from stock-based compensation
(815
)
 
(1,792
)
Deferred compensation obligation
38

 
158

Amortization of employee benefit related costs
100

 
153

Construction allowances from landlords
2,425

 
968

Changes in operating assets and liabilities:
 

 
 

Increase in merchandise inventories
(15,140
)
 
(38,705
)
Increase in other assets
(8,548
)
 
(7,525
)
Increase in accounts payable and other liabilities
17,156

 
375

Total adjustments
12,672


(27,923
)
Net cash used in operating activities
(6,122
)

(34,779
)
 
 
 
 
Cash flows from investing activities:
 

 
 

Additions to property, equipment and leasehold improvements
(14,714
)
 
(16,809
)
Proceeds from disposal of assets
1,397

 
—

Net cash used in investing activities
(13,317
)
 
(16,809
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from revolving credit facility borrowings
116,340

 
103,125

Payments of revolving credit facility borrowings
(86,020
)
 
(48,475
)
Payments of long-term debt obligations
(1,200
)
 
(180
)
Payments for stock related compensation
(1,955
)
 
(2,088
)
Proceeds from exercise of stock awards
5,010

 
9,328

Excess tax benefits from stock-based compensation
815

 
1,792

Cash dividends paid
(3,952
)
 
(3,253
)
Net cash provided by financing activities
29,038


60,249

Net increase in cash and cash equivalents
9,599


8,661

 
 
 
 
Cash and cash equivalents:
 

 
 

Beginning of period
14,762

 
17,937

End of period
$
24,361


$
26,598






Stage Stores, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except earnings per share)
(Unaudited)

 
Thirteen Weeks Ended
 
May 3, 2014
 
May 4, 2013
Net loss from continuing operations:
 
 
 
On a U.S. GAAP basis
$
(12,046
)
 
$
(6,188
)
South Hill consolidation related charges, net of tax of $3,616
—

 
6,062

On a non-U.S. GAAP basis
$
(12,046
)
 
$
(126
)
Diluted loss per share:
 

 
 

On a U.S. GAAP basis
$
(0.38
)
 
$
(0.19
)
South Hill consolidation related charges
—

 
0.19

On a non-U.S. GAAP basis
$
(0.38
)
 
$
—

 
 
 
 


























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