EX-99 3 ex99_q2errel.htm STAGE STORES, INC., FORM 8-K, 8-20-09, EX 99

Exhibit 99

NEWS RELEASE

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

 
FOR IMMEDIATE RELEASE

Stage Stores Announces Second Quarter Results
Raises Fiscal 2009 Diluted EPS Guidance Range to $0.47 - $0.65
Provides Third and Fourth Quarter Guidance

HOUSTON, TX, August 20, 2009 -- Stage Stores, Inc. (NYSE: SSI) today reported net income for the second quarter ended August 1, 2009 of $9.1 million, or $0.24 per diluted share, compared to net income of $9.7 million, or $0.25 per diluted share, for the prior year second quarter ended August 2, 2008.

Andy Hall, President and Chief Executive Officer, commented, “We remain pleased with our ability to control inventories and expenses and deliver earnings that are within the guidance range provided for the quarter.  The gross margin rate for the second quarter exceeded last year by 70 basis points.  SG&A expenses were reduced by $4.7 million versus last year while operating 24 additional stores.”

Mr. Hall continued, “We opened our first three stores in former Goody’s markets under the Goody’s name on August 6th.  We plan to open eleven more Goody’s stores over the next three months, taking advantage of the current economic environment by negotiating very attractive lease rates for these new stores.  As the former Goody’s store format is comparable to ours, the net capital investment in these locations is about one half of our typical new store expenditure.  In addition to the 2009 openings, we expect to open 30 - 35 stores in former Goody’s markets in future years.

“With regard to our other priorities, we remain on track for a fall pilot of our markdown optimization tool in select merchandise zones and the fall roll-out of our new POS software platform.  The markdown optimization tool will benefit sales and gross margin after its company-wide roll-out in 2010.  Our north/south store realignment was executed successfully, and the new merchandise assortments for the 83 affected stores will be fully transitioned by the end of September.


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Stage Stores Announces
Second Quarter Results
Page – 2


“We remain financially sound, with strong operating cash flow, comparable store inventories down 11% and no borrowings on our $250 million credit facility,” Mr. Hall concluded.

 
Fiscal 2009 - Third Quarter, Fourth Quarter and Updated Full Year Guidance
Commenting on the Company’s guidance, Mr. Hall stated, “We expect the macroeconomic conditions to remain challenging during the second half of the year.  However, we believe our comparable store sales will benefit from easier comparisons, a more favorable holiday calendar, the anniversary of Hurricane Ike (September 2008) and Goody’s exiting over 100 of our markets.  As such, we are projecting a third quarter comparable store sales decrease of 4.0% to 7.0%, and a fourth quarter comparable store sales decrease of 5.0% to 8.0%.  For the fiscal year, we are projecting a comparable store sales decrease of 7.0% to 8.5%.  We are raising the low end of our EPS guidance range for the fiscal year, and are now projecting $0.47 to $0.65.”

3rd Quarter 2009:

   
3Q 2009 OUTLOOK
  
3Q 2008
Sales ($mm)
  
$318
-
$328
  
$334
             
Diluted EPS
  
$(0.29)
-
$(0.21)
  
$(0.19)
             
Diluted Shares (m)
  
38,080
  
38,603

·  
3Q 2008 results are on a non-GAAP basis and exclude a goodwill impairment charge of $95.4 million.

4th Quarter 2009:

   
4Q 2009 OUTLOOK
  
4Q 2008
Sales ($mm)
  
$425
-
$438
  
$456
             
Diluted EPS
  
$0.54
-
$0.65
  
$0.67
             
Diluted Shares (m)
  
38,800
  
37,994




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Stage Stores Announces
Second Quarter Results
Page – 3


FY 2009:

   
FY 2009 OUTLOOK
  
FY 2008
Sales ($mm)
  
$1,418
-
$1,441
  
$1,516
             
Diluted EPS
  
$0.47
-
$0.65
  
$0.77
             
Diluted Shares (m)
  
38,600
  
38,729

·  
FY 2008 results are on a non-GAAP basis and exclude a goodwill impairment charge recorded in the third quarter of $95.4 million.


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 703-639-1319.  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 Webcasts, then the webcast link.  A replay of the conference call will be available online until midnight on Friday, August 28, 2009.

About Stage Stores
Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns and communities through 752 stores located in 39 states.  The Company operates its stores under the five names of Bealls, Goody’s, Palais Royal, Peebles and Stage.  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 include comments regarding the number of new Goody’s stores that the Company plans to open during the second half of the 2009 fiscal year as well as the number of stores


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Stage Stores Announces
Second Quarter Results
Page – 4


that the Company intends to open beyond 2009 in former Goody’s markets.  Forward-looking statements also include comments regarding the Company’s sales and EPS outlooks for the third and fourth quarters of the 2009 fiscal year, as well as for the 2009 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 March 30, 2009, 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)

 
 
 

 
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(Unaudited)
 
Thirteen Weeks Ended
 
August 1, 2009
  
August 2, 2008
 
Amount
% to Sales (1)
  
Amount
% to Sales (1)
           
Net sales
 $      341,737
100.0%
  
 $    372,707
100.0%
Cost of sales and related buying, occupancy and
          
distribution expenses
         241,540
70.7%
  
       266,149
71.4%
Gross profit
         100,197
29.3%
  
       106,558
28.6%
Selling, general and administrative expenses
           83,854
24.5%
  
         88,521
23.8%
Store opening costs
                465
0.1%
  
           1,231
0.3%
Interest expense, net of income of $15 and $6, respectively
             1,141
0.3%
  
           1,221
0.3%
Income before income tax
           14,737
4.3%
  
         15,585
4.2%
Income tax expense
             5,644
1.7%
  
           5,922
1.6%
Net income
 $          9,093
2.7%
  
 $        9,663
2.6%
           
Basic and diluted earnings per share data:
          
Basic earnings per share
 $            0.24
    
 $          0.25
  
Basic weighted average shares outstanding
           38,070
    
         38,342
  
           
Diluted earnings per share
 $            0.24
    
 $          0.25
  
Diluted weighted average shares outstanding
           38,467
    
         38,960
  
           
(1) Percentages may not foot due to rounding.
          
           


 

 

 
 
 


Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(Unaudited)
 
Twenty-Six Weeks Ended
 
August 1, 2009
  
August 2, 2008
 
Amount
% to Sales (1)
  
Amount
% to Sales (1)
           
Net sales
 $      675,303
100.0%
  
 $    726,243
100.0%
Cost of sales and related buying, occupancy and
          
distribution expenses
         490,623
72.7%
  
       524,087
72.2%
Gross profit
         184,680
27.3%
  
       202,156
27.8%
Selling, general and administrative expenses
         167,460
24.8%
  
       176,860
24.4%
Store opening costs
             1,651
0.2%
  
           3,539
0.5%
Interest expense, net of income of $76 and $11, respectively
             2,299
0.3%
  
           2,522
0.3%
Income before income tax
           13,270
2.0%
  
         19,235
2.6%
Income tax expense
             5,082
0.8%
  
           7,309
1.0%
Net income
 $          8,188
1.2%
  
 $      11,926
1.6%
           
Basic and diluted earnings per share data:
          
Basic earnings per share
 $            0.22
    
 $          0.31
  
Basic weighted average shares outstanding
           38,000
    
         38,292
  
           
Diluted earnings per share
 $            0.21
    
 $          0.31
  
Diluted weighted average shares outstanding
           38,350
    
         38,939
  
           
(1) Percentages may not foot due to rounding.
          
           


 
 
 


Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(Unaudited)
 
August 1, 2009
  
January 31, 2009
       
ASSETS
      
Cash and cash equivalents
 $            61,180
  
 $               26,278
Merchandise inventories, net
             310,038
  
                314,517
Prepaid expenses and other current assets
               27,048
  
                  30,824
     Total current assets
             398,266
  
                371,619
       
Property, equipment and leasehold improvements, net
             359,202
  
                367,135
Intangible asset
               14,910
  
                  14,910
Other non-current assets, net
               15,617
  
                  14,379
     Total assets
 $          787,995
  
 $             768,043
       
LIABILITIES AND STOCKHOLDERS' EQUITY
      
Accounts payable
 $          110,660
  
 $               97,760
Current portion of debt obligations
               11,685
  
                  11,161
Accrued expenses and other current liabilities
               65,821
  
                  60,727
     Total current liabilities
             188,166
  
                169,648
       
Debt obligations
               40,966
  
                  45,851
Other long-term liabilities
             100,682
  
                102,541
     Total liabilities
             329,814
  
                318,040
       
Commitments and contingencies
      
       
Common stock, par value $0.01, 100,000 shares authorized,
      
    56,069 and 55,849 shares issued, respectively
                    561
  
                       558
Additional paid-in capital
             498,633
  
                494,765
Less treasury stock - at cost, 17,986 shares
           (286,991)
  
              (286,751)
Accumulated other comprehensive loss
               (4,978)
  
                  (5,138)
Retained earnings
             250,956
  
                246,569
     Stockholders' equity
             458,181
  
                450,003
     Total liabilities and stockholders' equity
 $          787,995
  
 $             768,043
       


 
 
 
 
 
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Twenty-Six Weeks Ended
 
August 1, 2009
  
August 2, 2008
       
Cash flows from operating activities:
      
Net income
 $                  8,188
  
 $                  11,926
Adjustments to reconcile net income to net cash provided by operating activities:
      
Depreciation, amortization and impairments
                   30,529
  
                     29,204
Deferred income taxes
                        305
  
                          (33)
Tax deficiency from stock-based compensation
                      (373)
  
                        (146)
Stock-based compensation expense
                     3,294
  
                       3,280
Amortization of debt issue costs
                        145
  
                          123
Excess tax benefits from stock-based compensation
                      (124)
  
                        (468)
Deferred compensation
                          71
  
                          357
Amortization of employee benefit related costs
                        260
  
                              -
Construction allowances from landlords
                     2,005
  
                       9,167
Changes in operating assets and liabilities:
      
Decrease (increase) in merchandise inventories
                     4,479
  
                     (6,964)
Decrease in other assets
                     1,703
  
                     18,499
Increase in accounts payable and other liabilities
                   15,545
  
                     21,418
Total adjustments
                   57,839
  
                     74,437
Net cash provided by operating activities
                   66,027
  
                     86,363
       
Cash flows from investing activities:
      
Additions to property, equipment and leasehold improvements
                 (24,304)
  
                   (52,334)
Proceeds from insurance related to property, equipment and leasehold improvements
                        578
  
                              -
Net cash used in investing activities
                 (23,726)
  
                   (52,334)
       
Cash flows from financing activities:
      
Proceeds from (payments on):
      
Borrowings under revolving credit facility, net
                             -
  
                   (39,059)
Equipment financing
                             -
  
                     14,485
Finance lease obligations
                     1,585
  
                              -
Debt obligations
                   (5,946)
  
                     (3,190)
Debt issuance costs
                             -
  
                        (145)
Repurchases of common stock
                      (240)
  
                        (509)
Exercise of stock options
                        879
  
                       1,095
Excess tax benefits from stock-based compensation
                        124
  
                          468
Cash dividends
                   (3,801)
  
                     (3,831)
Net cash used in financing activities
                   (7,399)
  
                   (30,686)
Net increase in cash and cash equivalents
                   34,902
  
                       3,343
       
Cash and cash equivalents:
      
Beginning of period
                   26,278
  
                     17,028
End of period
 $                61,180
  
 $                  20,371