Stage Stores, Inc. (NYSE:SSI) today reported results for the
fourth quarter and fiscal year ended February 3, 2018, and provided
guidance for fiscal year 2018. For the fourth quarter, comparable
sales increased 1.1% and net income was $5.6 million, or $0.19 per
diluted share, compared to a net loss of $6.8 million or $0.25 per
diluted share in the fourth quarter of 2016. On an adjusted basis,
including the impact of tax matters and other items discussed
below, fourth quarter net income was $13.6 million, or $0.45 per
diluted share, compared to net income of $5.7 million, or $0.20 per
diluted share, in the fourth quarter of 2016.
Michael Glazer, President and Chief Executive Officer commented,
“We are very pleased to have ended the year with results that
exceeded the high end of our guidance and the prior year, including
fourth quarter positive comparable sales, gross margin expansion
and significant net income growth. Our fourth quarter comparable
sales increase of 1.1% reflects momentum that began in October and
continued through the remainder of the year. Fourth quarter
adjusted earnings per share improved 125% compared to last year.
Our strategic initiatives designed to drive sales, including
consistent newness in our assortments and accelerating growth in
trending categories such as beauty, gifts, footwear, and
activewear, proved to be successful. Additionally, we effectively
managed promotions in a highly competitive environment, and ended
the year with our inventory levels down 5% in department stores and
the content in great shape across the entire business. The
enhancements we have made to our online business continue to
deliver results as ecommerce sales grew double digits in each
quarter of fiscal 2017.”
Mr. Glazer continued, “Fourth quarter merchandise margin was up
140 basis points and adjusted gross profit was up 130 basis points
compared to the fourth quarter last year. We also maintained our
strong liquidity position throughout the year, generated positive
free cash flow even after investing $47 million in acquiring
selected Gordmans assets, and ended the year with $112 million of
excess availability under our revolving credit facility. In
addition, as part of our focus on returning value to shareholders,
we recently announced our 51st consecutive quarterly cash
dividend.”
Fourth Quarter
Results
Fourth quarter 2017 results compared to fourth quarter 2016
results were as follows:
- Net sales were $549 million compared to
$454 million last year
- Comparable sales increased 1.1%
compared to a decline of 8.5% last year
- Adjusted EBIT was $22.1 million
compared to $13.6 million last year
- Net income was $5.6 million compared to
a net loss of $6.8 million last year
- Adjusted net income was $13.6 million
compared to $5.7 million last year
- Earnings per diluted share were $0.19
compared to a loss per diluted share of $0.25 last year
- Adjusted earnings per diluted share
were $0.45 compared to $0.20 last year
Results for the fourth quarter 2017 reflect 14 weeks versus 13
weeks in 2016, except that comparable sales were measured over 13
weeks for both periods. Adjusted results for the fourth quarter
2017 exclude after tax charges associated with the South Hill
distribution center closure, store closures, impairments, pension
charges, and $6.3 million or $0.21 of the impact of federal tax
reform and the valuation of net deferred tax assets. Adjusted
results for the fourth quarter 2016 exclude severance charges
associated with workforce reductions, store closures, and
impairments.
2017 Results
Full year 2017 results compared to full year 2016 results were
as follows:
- Net sales were $1,592 million compared
to $1,443 million last year
- Comparable sales declined 3.6% compared
to a decline of 8.8% last year
- Adjusted EBIT was $(29.8) million
compared to $(35.0) million last year
- Net loss was $37.3 million compared to
a net loss of $37.9 million last year
- Adjusted net loss was $23.0 million
compared to an adjusted net loss of $24.1 million last year
- Loss per diluted share was $1.37
compared to a loss per diluted share of $1.40 last year
- Adjusted loss per diluted share was
$0.85 compared to $0.89 last year
During 2017, the company did not open any department stores and
closed 21 department stores. The company added 58 Gordmans stores
during 2017.
Results for the full year 2017 reflect 53 weeks versus 52 weeks
in 2016, except that comparable sales were measured over 52 weeks
for both years. Adjusted results for the full year 2017 exclude
after-tax charges associated with the Gordmans acquisition, the
South Hill distribution center closure, store closures,
impairments, pension charges, and the impact of federal tax reform
and the valuation of net deferred tax assets. Adjusted results for
the full year 2016 exclude the consolidation of our corporate
headquarters, severance associated with workforce reductions, store
closures, impairments, and other strategic initiatives.
2018 Guidance
Regarding the company’s outlook for fiscal 2018, Mr. Glazer
stated, “We are optimistic about 2018 and remain focused on
building upon the momentum we established in our department store
sales. In addition, our acquisition of Gordmans is a great
opportunity for us to leverage the strength of the off-price
sector, and we plan to accelerate growth in this business during
the coming year. As a result, in 2018, we expect to deliver
positive comparable sales, significantly improve EBIT, and generate
positive free cash flow.”
For fiscal 2018, the company provided the following
guidance:
- Net sales between $1,610 million and
$1,640 million
- Comparable sales of flat to an increase
of 2.0%
- EBIT between $(29) million and $(18)
million
- 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
- Capital expenditures of $30
million
- Open one Gordmans store and close 25 to
30 department stores
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 6378749. Alternatively,
interested parties may listen to an audio webcast of the call
through the Investor Relations section of the company’s website
(corporate.stage.com) under the
“Webcasts” caption. A replay of the call will be available online
for 30 days.
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 March 8, 2018, the company operates in 42 states
through 777 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)
Stage Stores, Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended February 3, 2018
January 28, 2017 Amount % to Sales (a) Amount % to
Sales (a) Net sales $ 549,351 100.0 % $ 454,443 100.0 % Cost
of sales and related buying, occupancy and distribution expenses
412,709 75.1 % 365,538 80.4 % Gross profit 136,642
24.9 % 88,905 19.6 % Selling, general and administrative expenses
117,018 21.3 % 95,988 21.1 % Interest expense 2,175 0.4 %
1,435 0.3 % Income (loss) before income tax 17,449 3.2 %
(8,518 ) (1.9 )% Income tax expense (benefit) 11,805 2.1 %
(1,674 ) (0.4 )% Net income (loss) $ 5,644 1.0 % $ (6,844 )
(1.5 )% Basic earnings (loss) per share data: Basic earnings
(loss) per share $ 0.19 $ (0.25 ) Basic weighted average
shares outstanding 27,628 27,163 Diluted
earnings (loss) per share data: Diluted earnings (loss) per share $
0.19 $ (0.25 ) Diluted weighted average shares outstanding
27,628 27,163 (a) Percentages may not foot due to
rounding.
Stage Stores, Inc.
Condensed Consolidated Statements of
Operations
(in thousands, except per share data)
(Unaudited)
Twelve Months Ended February 3, 2018 January
28, 2017 Amount % to Sales (a) Amount % to Sales (a)
Net sales $ 1,592,275 100.0 % $ 1,442,718 100.0 % Cost of
sales and related buying, occupancy and distribution expenses
1,228,780 77.2 % 1,144,666 79.3 % Gross profit
363,495 22.8 % 298,052 20.7 % Selling, general and administrative
expenses 406,206 25.5 % 356,064 24.7 % Interest expense 7,680
0.5 % 5,051 0.4 % Loss before income tax (50,391 )
(3.2 )% (63,063 ) (4.4 )% Income tax benefit (13,068 ) (0.8 )%
(25,166 ) (1.7 )% Net loss $ (37,323 ) (2.3 )% $ (37,897 ) (2.6 )%
Basic loss per share data: Basic loss per share $ (1.37 ) $
(1.40 ) Basic weighted average shares outstanding 27,510
27,090 Diluted loss per share data: Diluted loss per
share $ (1.37 ) $ (1.40 ) Diluted weighted average shares
outstanding 27,510 27,090 (a) Percentages may not
foot due to rounding.
Stage Stores, Inc.
Condensed Consolidated Balance
Sheets
(in thousands, except par value)
(Unaudited)
February 3, 2018 January 28, 2017
ASSETS
Cash and cash equivalents $ 21,250 $ 13,803 Merchandise
inventories, net 439,735 409,384 Prepaid expenses and other current
assets 51,049 41,574 Total current assets 512,034
464,761 Property, equipment and leasehold improvements, net
252,788 284,110 Intangible assets 17,135 15,235 Other non-current
assets, net 24,449 22,883 Total assets $ 806,406
$ 786,989
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 145,991 $ 101,985 Accrued expenses and other
current liabilities 67,427 66,685 Total current
liabilities 213,418 168,670 Long-term debt obligations
180,350 163,749 Other long-term liabilities 68,524 74,410
Total liabilities 462,292 406,829
Commitments and contingencies Common stock, par value $0.01,
100,000 shares authorized, 32,806 and 32,340 shares issued,
respectively 328 323 Additional paid-in capital 418,658 410,504
Treasury stock, at cost, 5,175 shares, respectively (43,298 )
(43,286 ) Accumulated other comprehensive loss (5,177 ) (5,648 )
(Accumulated deficit) retained earnings (26,397 ) 18,267
Total stockholders' equity 344,114 380,160 Total
liabilities and stockholders' equity $ 806,406 $ 786,989
Stage Stores, Inc.
Condensed Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Twelve Months Ended February 3, 2018 January
28, 2017 Cash flows from operating activities: Net loss $ (37,323 )
$ (37,897 ) Adjustments to reconcile net loss to net cash provided
by operating activities: Depreciation, amortization and impairment
of long-lived assets 67,161 91,656 (Gain) loss on retirements of
property, equipment and leasehold improvements (918 ) 296 Deferred
income taxes (1,078 ) (20,224 ) Tax deficiency from stock-based
compensation — (4,565 ) Stock-based compensation expense 8,386
9,461 Amortization of debt issuance costs 289 229 Deferred
compensation obligation 12 218 Amortization of employee benefit
related costs and pension settlement charges 1,235 897 Construction
allowances from landlords 1,228 7,079 Other changes in operating
assets and liabilities: Decrease in merchandise inventories 1,419
26,612 (Increase) decrease in other assets (8,532 ) 754 Increase in
accounts payable and other liabilities 43,582 9,768
Net cash provided by operating activities 75,461 84,284
Cash flows from investing activities: Additions to
property, equipment and leasehold improvements (38,630 ) (74,257 )
Proceeds from insurance and disposal of assets 2,413 1,179 Business
acquisition (36,144 ) — Net cash used in investing
activities (72,361 ) (73,078 ) Cash flows from financing
activities: Proceeds from revolving credit facility borrowings
575,210 512,873 Payments of revolving credit facility borrowings
(555,624 ) (510,011 ) Proceeds from long-term debt obligation —
5,830 Payments of long-term debt obligations (6,414 ) (4,252 )
Payments of debt issuance costs (34 ) (815 ) Payments for stock
related compensation (251 ) (859 ) Cash dividends paid (8,540 )
(16,656 ) Net cash provided by (used in) financing activities 4,347
(13,890 ) Net increase (decrease) in cash and cash
equivalents 7,447 (2,684 ) Cash and cash equivalents:
Beginning of period 13,803 16,487 End of period $
21,250 $ 13,803
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(in thousands, except earnings per
share)
(Unaudited)
Three Months Ended Twelve Months Ended
February 3,2018
January 28,2017
February 3,2018
January 28,2017
Net income (loss) (GAAP) $ 5,644 $ (6,844 ) $ (37,323 ) $ (37,897 )
Business acquisition costs (pretax) (110 ) — 9,059 — Store
closures, impairments and other strategic initiatives (pretax)
1,648 19,861 2,608 21,256 South Hill distribution center closure
(pretax) 828 — 828 — Pension settlement charge (pretax) 65 — 438 —
Consolidation of corporate headquarters (pretax) — — — 110
Severance charges associated with workforce reduction (pretax) —
839 — 1,632 Income tax impact of above adjustments (803 ) (8,189 )
(4,979 ) (9,179 ) Valuation allowance on net deferred tax assets
(tax) 6,077 — 6,077 — Federal tax reform (tax) 255 —
255 — Adjusted net income (loss) (non-GAAP) $ 13,604
$ 5,667 $ (23,037 ) $ (24,078 ) Diluted
earnings (loss) per share (GAAP) $ 0.19 $ (0.25 ) $ (1.37 ) $ (1.40
) Business acquisition costs (pretax) — — 0.33 — Store closures,
impairments and other (pretax) 0.05 0.70 0.09 0.78 South Hill
distribution center closure (pretax) 0.03 — 0.03 — Pension
settlement charge (pretax) — — 0.02 — Consolidation of corporate
headquarters (pretax) — — — — Severance charges associated with
workforce reduction (pretax) — 0.03 — 0.06 Income tax impact of
above adjustments (0.03 ) (0.29 ) (0.18 ) (0.33 ) Valuation
allowance on net deferred tax assets (tax) 0.20 — 0.22 — Federal
tax reform (tax) 0.01 — 0.01 — Adjusted
diluted earnings (loss) per share (non-GAAP)(a) $ 0.45 $
0.20 $ (0.85 ) $ (0.89 ) (a) Adjusted diluted earnings per
share for the three months ended January 28, 2017, reflect a $0.01
adjustment attributable to the weighted average shares outstanding
used in the computations for a GAAP net loss and non-GAAP net
income. GAAP diluted loss per share excludes the effect of
potentially dilutive shares due to a net loss for the period,
whereas adjusted diluted earnings per share includes the effect of
dilutive shares due to adjusted net income for the period.
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(in thousands) (Unaudited)
Three Months Ended Twelve Months Ended
February 3,2018
January 28,2017
February 3,2018
January 28,2017
Net income (loss) (GAAP) $ 5,644 $ (6,844 ) $ (37,323 ) $ (37,897 )
Interest expense 2,175 1,435 7,680 5,051 Income tax expense
(benefit) 11,805 (1,674 ) (13,068 ) (25,166 ) Earnings
before interest and taxes (EBIT) (non-GAAP) 19,624 (7,083 ) (42,711
) (58,012 ) Business acquisition costs (pretax) (110 ) — 9,059 —
Store closures, impairments and other strategic initiatives
(pretax) 1,648 19,861 2,608 21,256 South Hill distribution center
closure (pretax) 828 — 828 — Pension settlement charge (pretax) 65
— 438 — Consolidation of corporate headquarters (pretax) — — — 110
Severance charges associated with workforce reduction (pretax) —
839 — 1,632 Adjusted EBIT (non-GAAP) $
22,055 $ 13,617 $ (29,778 ) $ (35,014 )
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(in thousands) (Unaudited)
Three Months Ended February 3, 2018 January
28, 2017 Amount % to Sales (a) Amount % to Sales (a)
Gross profit (GAAP) $ 136,642 24.9 % $ 88,905 19.6 % Store closures
and impairments 1,464 0.3 % 19,353 4.3 % Adjusted
gross profit (non-GAAP) $ 138,106 25.1 % $ 108,258
23.8 % Twelve Months Ended February 3, 2018 January 28, 2017
Amount % to Sales (a) Amount % to Sales (a) Gross profit (GAAP) $
363,495 22.8 % $ 298,052 20.7 % Store closures and impairments
2,047 0.1 % 19,584 1.4 % Adjusted gross profit
(non-GAAP) $ 365,542 23.0 % $ 317,636 22.0 % (a)
Percentages may not foot due to rounding. Three Months Ended
Twelve Months Ended February 3, 2018 January 28, 2017 February 3,
2018 January 28, 2017 Selling, general and administrative expenses
(GAAP) $ 117,018 $ 95,988 $ 406,206 $ 356,064 Business acquisition
costs 110 — (9,059 ) — Store closures and other strategic
initiatives (184 ) (508 ) (561 ) (1,672 ) South Hill distribution
center closure (828 ) — (828 ) — Pension settlement charge (65 ) —
(438 ) — Consolidation of corporate headquarters — — — (110 )
Severance charges associated with
workforce reduction
— (839 ) — (1,632 ) Adjusted selling, general and
administrative expenses (non-GAAP) $ 116,051 $ 94,641
$ 395,320 $ 352,650
Stage Stores, Inc.
Reconciliation of Non-GAAP Financial
Measures
(in millions) (Unaudited)
2018 Guidance Low High Net loss (GAAP) $ (38 )
$ (27 ) Interest expense 9 9 Income tax — — EBIT
(non-GAAP) $ (29 ) $ (18 )
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version on businesswire.com: http://www.businesswire.com/news/home/20180308005446/en/
Stage Stores, Inc.Alysha Tawney, 713-331-4902Manager, Strategy
and Investor RelationsIR@stage.com
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