EX-99.1 3 nr_4q03er.htm

Exhibit 99.1

NEWS RELEASE

CONTACT:

Bob Aronson
Director of Investor Relations
(800) 579-2302
(baronson@stagestores.com)

FOR IMMEDIATE RELEASE

Stage Stores Announces Fourth Quarter Results

Company Provides Earnings Guidance

Announces Sale of Peebles Private Label Credit Card Portfolio

-- Fourth Quarter Net Income Increases 21.7% --

HOUSTON, TX, March 11, 2004 -- Stage Stores, Inc. (Nasdaq: STGS) today reported that net income for the fourth quarter ended January 31, 2004 increased 21.7% to $19.6 million from $16.1 million in the year-ago quarter. Due to the higher number of diluted weighted average shares outstanding in this year's fourth quarter versus last year, earnings per share for the period increased 16.0% to $0.94 per diluted share, as compared to $0.81 per diluted share last year. Total sales for the 13-week period, which include sales for the Peebles stores in the current year's results, increased 43.5% to $368.6 million from $256.9 million last year. Comparable store sales, including comparable store sales for the Peebles stores in both years, decreased 0.6% versus a decrease of 5.6% for the same period last year.

Jim Scarborough, Chairman, President and Chief Executive Officer, commented, "Although the fourth quarter got off to a weak start, primarily due to unseasonably warm weather during November and a continuation of the highly competitive retail environment, we saw strength later in the quarter and achieved comparable store sales increases in both December and January. Additionally, our strong year-over-year increases in both net income and earnings per share reflect the accretive impact of the Peebles acquisition, as the earnings contributed by the Peebles stores during the quarter exceeded the income generated by our former private label credit card operations in the same period last year."

 

--more--

Stage Stores Announces

Fourth Quarter Results

Page - 2

Net income for the full 2003 fiscal year increased to $55.0 million from $54.4 million in fiscal 2002. Earnings per share for the full year were $2.73 per diluted share versus the 2002 level of $2.60 per diluted share. Net income results for fiscal 2003 are not entirely comparable to results for fiscal 2002. This year's results reflect net credit income only through September, due to the sale of the Company's private label credit card portfolio. Further, an after-tax net gain related to the sale of the credit card portfolio of $7.8 million, or $0.38 per diluted share, was recorded in this year's third quarter. Lastly, with the acquisition of Peebles occurring on November 4, 2003, the Company's results reflect the contribution of the Peebles stores only in the current year's fourth quarter.

Total sales for the 52-week period increased 11.0% to $972.2 million from $875.6 million last year, reflecting the Peebles acquisition and the impact of the 28 net new stores opened during the year. Comparable store sales for the full year decreased 3.7%, compared to an increase of 1.9% in 2002.

Mr. Scarborough continued, "Fiscal 2003 presented us with both challenges and opportunities. It was a year marked for the most part by a weak economic and retail environment, resulting in soft consumer demand and highly promotional market conditions. However, it was a strategically important and rewarding year. Without question, our most significant events of the year were the successful sale of our private label credit card business and our subsequent acquisition of Peebles. This key acquisition positions our Company for strong future sales and earnings growth, creates new opportunities for unit growth and geographic expansion, improves our competitive position and enhances our financial flexibility."

Mr. Scarborough concluded, "We enter this new year with both enthusiasm and momentum, having achieved an 8.0% comparable store sales increase in February. We are working to meet the needs, aspirations and expectations of our customers every single day. Furthermore, we maintain our commitment to position our business appropriately, both strategically and operationally, to produce the best possible returns for our shareholders."

--more--

Stage Stores Announces

Fourth Quarter Results

Page - 3

Fiscal 2004 - First Quarter and Full Year Outlook

Fiscal 2004 - 1st Quarter:

For the first quarter ending May 1, 2004, the Company currently anticipates reporting revenues in the range of $284.0 to $290.0 million, with the expectation of a comparable store sales increase in the low to mid single digit range. Net income is currently projected to be in the range of $18.2 to $19.4 million, or earnings of $0.87 to $0.93 per diluted share. This outlook compares to earnings of $13.4 million, or $0.69 per diluted share, for the prior year first quarter. In projecting earnings per share for the fiscal 2004 first quarter, the Company used an estimated diluted share count of 20.9 million shares.

Fiscal 2004 - Full Year:

For the full 2004 fiscal year ending January 29, 2005, the Company currently anticipates reporting revenues in the range of $1.225 to $1.250 billion, with the expectation of a comparable store sales increase in the low single digit range. Net income is currently projected to be in the range of $55.0 to $60.0 million, or earnings of $2.75 to $3.00 per diluted share. This outlook compares to earnings of $55.0 million, or $2.73 per diluted share, for the full 2003 fiscal year. Excluding last year's net gain of $7.8 million, or $0.38 per diluted share, related to the sale of the Company's credit card portfolio, adjusted net income for fiscal 2003 was $47.2 million, or $2.35 per diluted share. In projecting earnings per share for the full 2004 fiscal year, the Company used an estimated diluted share count of 20.0 million shares.

Sale of Peebles Private Label Credit Card Portfolio

The Company also announced that, on March 5th, it completed the sale of the Peebles private label credit card portfolio to a subsidiary of Alliance Data Systems Corporation. At closing, the Company received net cash proceeds of $34.8 million, which approximated the amount of account balances outstanding on the closing date. Following closing, a portion of the net cash proceeds was utilized by Stage to pay off the outstanding balance under its $250 million revolving credit facility, leaving an invested cash balance of $23.9 million.

--more--

Stage Stores Announces

Fourth Quarter Results

Page - 4

$50 Million Stock Repurchase Program

The Company further reported that it had repurchased 430,900 shares of its common stock through March 10, 2004, at an aggregate purchase price of approximately $14.2 million, under its current $50 million Stock Repurchase Program.

Conference Call Information

The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss the fourth quarter's results as well as its outlook for fiscal 2004. All interested parties can listen to a live web cast of the Company's conference call by logging on to the Company's web site at www.stagestoresinc.com and then clicking on Investor Relations, then Webcasts, then the webcast link. As an alternative, individual investors and other interested parties can listen to the conference call web cast by logging on to www.fulldisclosure.com, while institutional investors, who are members, can access the call through www.streetevents.com. A replay of the conference call will be available online at each web site until midnight on Friday, March 19, 2004.

Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small towns and communities through 518 stores located in 27 states. The Company operates under the Stage, Bealls and Palais Royal names throughout the South Central states, and under the Peebles name throughout the Mid-Atlantic, Southeastern and Midwestern states. For more information about Stage Stores, visit the Company's web site at www.stagestoresinc.com.

"Safe Harbor" Statement

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including comments regarding the anticipated benefits of the Peebles acquisition, comments regarding the Company's outlook and expectations for the first quarter of the 2004 fiscal year and for the full 2004 fiscal year. The Company intends forward looking terminology such as "believes", "expects", "may", "will", "should", "could", "anticipates", "plans" or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause the Company's 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 the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC") on April 23, 2003, in the Company's Quarterly Reports on Form 10-Q as filed with the SEC and other factors as may periodically be described in other Company filings with the SEC.

(Tables to Follow)

 

Stage Stores, Inc.
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
   
 

Thirteen Weeks Ended
 

January 31, 2004

February 1, 2003
  Amount % to Sales   Amount % to Sales
           
Net sales $ 368,555 100.0%   $ 256,933 100.0%
Cost of sales and related buying, occupancy and distribution expenses 265,003 71.9%   183,226 71.3%
Gross profit 103,552 28.1%   73,707 28.7%
Selling, general and administrative expenses 71,519 19.4%   47,688 18.6%
Store opening costs 448 0.1%   61 0.0%
Interest, net 710 0.2%   461 0.2%
Income before income tax 30,875 8.4%   25,497 9.9%
Income tax expense 11,269 3.1%   9,434 3.7%
Net income $ 19,606 5.3%   $ 16,063 6.3%
           
Earnings per common share data:          
Basic earnings per common share

$ 1.02

    

$ 0.85

  
Basic weighted average common shares outstanding

19,224

    

18,917
           
Diluted earnings per common share

$ 0.94

    

$ 0.81

  
Diluted weighted average common shares outstanding

20,765

    

19,868

 

Stage Stores, Inc.
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
   
 

Fifty-Two Weeks Ended
 

January 31, 2004

February 1, 2003
  Amount % to Sales   Amount % to Sales
           
Net sales $ 972,212 100.0%   $ 875,557 100.0%
Cost of sales and related buying, occupancy and distribution expenses 692,605 71.2%   610,365 69.7%
Gross profit 279,607 28.8%   265,192 30.3%
Selling, general and administrative expenses 200,713 20.6%   176,202 20.1%
Store opening costs 2,022 0.2%   869 0.1%
Interest, net 2,446 0.3%   1,777 0.2%
Gain on sale of proprietary credit card portfolio, net (12,218) -1.3%   - 0.0%
Income before income tax 86,644 8.9%   86,344 9.9%
Income tax expense 31,625 3.3%   31,947 3.6%
Net income $ 55,019 5.7%   $ 54,397 6.2%
           
Earnings per common share data:          
Basic earnings per common share

$ 2.90

    

$ 2.78

  
Basic weighted average common shares outstanding

19,003

    

19,550
           
Diluted earnings per common share

$ 2.73

    

$ 2.60

  
Diluted weighted average common shares outstanding

20,184

    

20,959

 

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

January 31, 2004

  

February 1, 2003
  (unaudited)    
ASSETS      
Cash and cash equivalents $ 14,733   $ 20,886
Retained interest in receivables sold -   127,547
Accounts receivable, net 35,112   11,023
Merchandise inventories, net 259,687   179,922
Current deferred taxes 27,701   21,280
Prepaid expenses and other current assets

26,071

  

17,625
     Total current assets 363,304   378,283
       
Property, equipment and leasehold improvements, net 190,958   135,846
Deferred taxes -   12,016
Goodwill 80,054   -
Intangible asset 14,910   -
Other non-current assets, net

10,021

  

6,624
     Total assets

$ 659,247

  

$ 532,769
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $ 75,685   $ 56,286
Income taxes payable 2,598   3,805
Current portion of long-term debt 381   210
Accrued expenses and other current liabilities

54,083

  

44,496
     Total current liabilities 132,747   104,797
       
Revolving credit facility 10,700   -
Long-term debt 542   672
Deferred taxes 14,028   -
Other long-term liabilities

28,156

  

15,183
     Total liabilities

186,173

  

120,652
       
Commitments and contingencies      
       
Common stock, par value $0.01, 50,000 shares authorized,      
     20,579 and 20,042 shares issued and outstanding, respectively 206   200
Additional paid-in capital 374,646   363,067
Less treasury stock - at cost (1,415 and 1,169 shares, respectively) (33,127)   (25,461)
Retained earnings 131,349   76,331
Minimum pension liability adjustment

-

  

(2,020)
     Stockholders' equity

473,074

  

412,117
     Total liabilities and stockholders' equity

$ 659,247

  

$ 532,769

 

Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Fifty-Two   Fifty-Two
  Weeks Ended   Weeks Ended
 

January 31, 2004

  

February 1, 2003
Cash flows from operating activities:      
   Net income $ 55,019   $ 54,397
   Adjustments to reconcile net income to net cash      
   provided by operating activities:      
      Gain on sale of proprietary credit card portfolio, net (12,218)   -
      Depreciation and amortization 24,011   17,457
      Amortization of debt issue costs 1,724   1,413
      Provision for bad debts 16,794   33,693
      Deferred income taxes 19,971   17,024
      Proceeds from sale of proprietary credit card portfolio, net 158,200   -
   Changes in operating assets and liabilities:      
      (Increase) decrease in accounts receivable and retained interest in receivables sold 37,580   (6,970)
      (Increase) decrease in merchandise inventories 13,335   (2,104)
      (Increase) decrease in other assets 7,816   (7,645)
      Decrease in accounts payable and other liabilities

(11,548)

  

(2,155)
         Total adjustments

255,665

  

50,713
      Net cash provided by operating activities

310,684

  

105,110
       
Cash flows from investing activities:      
Additions to property, equipment and leasehold improvements (35,444)   (43,963)
Proceeds from retirement of fixtures and equipment 500   272
Acquisition of Peebles, net of cash

(172,897)

  

-
      Net cash used in investing activities

(207,841)

  

(43,691)
       
Cash flows from financing activities:      
Proceeds from (payments on):      
   Revolving credit facility (43,036)   -
   Accounts receivable securitization borrowings (64,000)   (39,000)
   Long-term debt (231)   (188)
   Exercise of stock options 8,140   1,537
   Repurchase of common stock (7,666)   (25,461)
   Additions to debt issue cost

(2,203)

  

(100)
      Net cash used in financing activities

(108,996)

  

(63,212)
Net decrease in cash and cash equivalents (6,153)   (1,793)
Cash and cash equivalents:      
   Beginning of period

20,886

  

22,679
   End of period

$ 14,733

  

$ 20,886
Supplemental disclosures:      
   Interest paid

$ 1,307

  

$ 918
   Income taxes paid

$ 14,810

  

$ 11,274