STAGE STORES INC - FORM 8-K - EX-99.1 - EXHIBIT - August 26, 2014

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Exhibit 99.1


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

                        
FOR IMMEDIATE RELEASE

Stage Stores Reports Second Quarter Results
                        
HOUSTON, TX, August 21, 2014 -- Stage Stores, Inc. (NYSE: SSI) today reported financial results for the second quarter ended August 2, 2014.

Total sales were $377 million. Comparable store sales decreased 4.2%. The Company reported net income of $11.2 million, or $0.35 per diluted share, versus EPS of $0.29 for the second quarter of the prior year period. On an adjusted basis, EPS from continuing operations in the 2013 second quarter was $0.45.

Michael Glazer, President and Chief Executive Officer, stated, “We found the second quarter to be challenging, but we were encouraged that our sales trend improved towards the end of the quarter. We were pleased with the performance of our back-to-school categories as well as cosmetics, which delivered another strong quarterly performance. We managed our merchandise margins and inventory well and feel good about forward looking inventory levels and content. We expect improved second half results given our sales driving initiatives.”

Reported Results
The Company reported earnings of $11.2 million, or $0.35 per diluted share, for the second quarter. For the prior year’s second quarter, including discontinued operations and one-time items, the Company reported earnings of $9.6 million, or $0.29 per diluted share. The prior year’s quarterly earnings include results from the Steele’s division, which was sold on March 7, 2014.

For the first six months of the fiscal year, comparable store sales decreased 2.2%. The net loss for the first half of 2014, including discontinued operations, was $7.6 million, or $0.24 per share, compared to net income of $2.8 million, or $0.08 per diluted share, in the comparable prior year period.




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Stage Stores Reports
Second Quarter Results
Page - 2


Revised Full Year 2014 Guidance
Comparable store sales for the second half of the year are now expected to be in the range of flat to positive 2.0%. EPS guidance for the full year from continuing operations is now expected to be in the range of $1.05 - $1.15.
 
 
 
FY 2014 OUTLOOK*
 
FY 2013*
Sales ($mm)

 
$1,610
—
$1,625
 
$1,610
 
 
 
 
 
 
 
Adjusted EPS
 
$1.05
—
$1.15
 
1.22**
 
 
 
 
 
 
 
Diluted Shares (m)
 
32,240
 
32,765

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

Conference Call Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its second quarter results. Interested parties can participate in the Company’s conference call by dialing 703-639-1358. 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, August 29, 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 849 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.

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


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Stage Stores Reports
Second Quarter Results
Page - 3


include comments regarding the Company’s sales, EPS and diluted share count outlooks for the 2014 fiscal year. Forward-looking statements also include comments regarding the Company’s out look for comparable store sales for the second half of 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

August 2, 2014

August 3, 2013

Amount

% to Sales (1)

Amount

% to Sales (1)








Net sales
$
377,446


100.0
%

$
389,991


100.0
 %
Cost of sales and related buying, occupancy and distribution expenses
265,106


70.2
%

274,416


70.4
 %
Gross profit
112,340


29.8
%

115,575


29.6
 %
Selling, general and administrative expenses
93,108


24.7
%

97,489


25.0
 %
Store opening costs
224


0.1
%

122


—
 %
Interest expense
755


0.2
%

708


0.2
 %
Income from continuing operations before income tax
18,253


4.8
%

17,256


4.4
 %
Income tax expense
7,061


1.9
%

6,424


1.6
 %
Income from continuing operations
11,192


3.0
%

10,832


2.8
 %
Loss from discontinued operations, net of tax benefit of $0 and $715, respectively
—


—
%

(1,225
)

(0.3
)%
Net income
$
11,192


3.0
%

$
9,607


2.5
 %












Basic earnings (loss) per share data:
 










Continuing operations
$
0.35





$
0.33




Discontinued operations
—





(0.04
)



Basic earnings per share
$
0.35





$
0.29




Basic weighted average shares outstanding
31,757





32,762
















Diluted earnings (loss) per share data:











Continuing operations
$
0.35





$
0.33




Discontinued operations
—





(0.04
)



Diluted earnings per share
$
0.35





$
0.29




Diluted weighted average shares outstanding
31,825





33,073















(1) Percentages may not foot due to rounding.














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


Twenty-Six Weeks Ended

August 2, 2014

August 3, 2013

Amount

% to Sales (1)

Amount

% to Sales (1)








Net sales
$
749,486


100.0
 %

$
762,094


100.0
 %
Cost of sales and related buying, occupancy and distribution expenses
559,205


74.6
 %

556,890


73.1
 %
Gross profit
190,281


25.4
 %

205,204


26.9
 %
Selling, general and administrative expenses
189,162


25.2
 %

195,436


25.6
 %
Store opening costs
1,032


0.1
 %

1,097


0.1
 %
Interest expense
1,479


0.2
 %

1,294


0.2
 %
Income (loss) from continuing operations before income tax
(1,392
)

(0.2
)%

7,377


1.0
 %
Income tax expense (benefit)
(538
)

(0.1
)%

2,733


0.4
 %
Income (loss) from continuing operations
(854
)

(0.1
)%

4,644


0.6
 %
Loss from discontinued operations, net of tax benefit of $4,257 and $1,114 respectively
(6,748
)

(0.9
)%

(1,893
)

(0.2
)%
Net income (loss)
$
(7,602
)

(1.0
)%

$
2,751


0.4
 %












Basic earnings (loss) per share data:
 










Continuing operations
$
(0.03
)




$
0.14




Discontinued operations
(0.21
)




(0.06
)



Basic earnings (loss) per share
$
(0.24
)




$
0.08




Basic weighted average shares outstanding
31,624





32,534
















Diluted earnings (loss) per share data:











Continuing operations
$
(0.03
)




$
0.14




Discontinued operations
(0.21
)




(0.06
)



Diluted earnings (loss) per share
$
(0.24
)




$
0.08




Diluted weighted average shares outstanding
31,624





32,908















(1) Percentages may not foot due to rounding.
























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

 
August 2, 2014
 
February 1, 2014
ASSETS
 
 
 
Cash and cash equivalents
$
26,094

 
$
14,762

Merchandise inventories, net
451,465

 
434,407

Prepaid expenses and other current assets
48,368

 
40,082

Total current assets
525,927


489,251

 
 
 
 
Property, equipment and leasehold improvements, net
280,903

 
282,534

Intangible asset
14,910

 
14,910

Other non-current assets, net
24,112

 
24,142

Total assets
$
845,852


$
810,837

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Accounts payable
$
125,480

 
$
125,707

Accrued expenses and other current liabilities
69,796

 
69,549

Total current liabilities
195,276

 
195,256

 
 
 
 
Long-term debt obligations
107,415

 
60,871

Other long-term liabilities
96,666

 
100,266

Total liabilities
399,357

 
356,393

 
 
 
 
Commitments and contingencies
—

 
—

 
 
 
 
Common stock, par value $0.01, 100,000 shares authorized, 31,789 and 31,222 shares issued, respectively
318

 
312

Additional paid-in capital
391,678

 
384,295

Less treasury stock - at cost, 0 and 0 shares, respectively
(855
)
 
(967
)
Accumulated other comprehensive loss
(4,493
)
 
(4,616
)
Retained earnings
59,847

 
75,420

Total stockholders' equity
446,495

 
454,444

Total liabilities and stockholders' equity
$
845,852

 
$
810,837

 
 
 
 















Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Twenty-Six Weeks Ended
 
August 2, 2014
 
August 3, 2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(7,602
)
 
$
2,751

Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 

Depreciation, amortization and impairment of long-lived assets
31,261

 
30,664

Loss on retirements of property, equipment and leasehold improvements
655

 
261

Deferred income taxes
(262
)
 
70

Tax benefit from stock-based compensation
126

 
1,779

Stock-based compensation expense
4,436

 
4,025

Amortization of debt issuance costs
150

 
129

Excess tax benefits from stock-based compensation
(826
)
 
(1,998
)
Deferred compensation obligation
(112
)
 
197

Amortization of employee benefit related costs
199

 
305

Construction allowances from landlords
2,756

 
1,418

Changes in operating assets and liabilities:
 

 
 

Increase in merchandise inventories
(17,058
)
 
(28,322
)
Increase in other assets
(8,416
)
 
(11,764
)
Decrease in accounts payable and other liabilities
(7,396
)
 
(344
)
Total adjustments
5,513


(3,580
)
Net cash used in operating activities
(2,089
)

(829
)
 
 
 
 
Cash flows from investing activities:
 

 
 

Additions to property, equipment and leasehold improvements
(30,286
)
 
(29,937
)
Proceeds from disposal of assets
1,448

 
11

Net cash used in investing activities
(28,838
)
 
(29,926
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from revolving credit facility borrowings
227,365

 
214,725

Payments of revolving credit facility borrowings
(179,600
)
 
(169,650
)
Payments of long-term debt obligations
(1,412
)
 
(363
)
Payments of debt issuance costs
—

 
(125
)
Payments for stock related compensation
(1,989
)
 
(2,165
)
Proceeds from exercise of stock awards
5,040

 
9,949

Excess tax benefits from stock-based compensation
826

 
1,998

Cash dividends paid
(7,971
)
 
(7,405
)
Net cash provided by financing activities
42,259


46,964

Net increase in cash and cash equivalents
11,332


16,209

 
 
 
 
Cash and cash equivalents:
 

 
 

Beginning of period
14,762

 
17,937

End of period
$
26,094


$
34,146






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

 
Thirteen Weeks Ended
 
Twenty-Six Weeks Ended
 
August 2, 2014
 
August 3, 2013
 
August 2, 2014
 
August 3, 2013
Net income (loss):
 
 
 
 
 
 
 
On a U.S. GAAP basis
$
11,192

 
$
9,607

 
$
(7,602
)
 
$
2,751

  Loss from discontinued operations
—

 
1,225

 
6,748

 
1,893

  Income (loss) from continuing operations
11,192


10,832


(854
)

4,644

South Hill Consolidation related charges, net of tax of $2,367 and $5,983, respectively
—

 
4,104

 
—

 
10,166

On a non-U.S. GAAP basis
$
11,192


$
14,936


$
(854
)

$
14,810

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share:
 
 
 
 
 
 
 
On a U.S. GAAP basis
$
0.35

 
$
0.29

 
$
(0.24
)
 
$
0.08

Loss from discontinued operations
—

 
0.04

 
0.21

 
0.06

Income (loss) from continuing operations
0.35


0.33


(0.03
)

0.14

South Hill Consolidation related charges
—

 
0.12

 
—

 
0.31

On a non-U.S. GAAP basis
$
0.35


$
0.45


$
(0.03
)

$
0.45

 
 
 
 
 
 
 
 


























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