EX-99 3 ex99_q4errel.htm STAGE STORES, INC., FORM 8K, EX 99
Exhibit 99

NEWS RELEASE

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

 
FOR IMMEDIATE RELEASE

Stage Stores Reports Record Adjusted 2012 EPS of $1.33, 45% Higher Than 2011

HOUSTON, TX, March 12, 2013 -- Stage Stores, Inc. (NYSE: SSI) today reported financial results for the fourth quarter and fiscal year ended February 2, 2013.  For the 2012 fiscal year, the Company reported adjusted earnings, excluding one-time items, of $42.6 million, or $1.33 per diluted share.  This compares to earnings of $31.0 million, or $0.92 per diluted share, in fiscal 2011.

"2012 was a phenomenal year for Stage Stores and one that all of our shareholders and associates can be extremely proud of," stated Michael Glazer, President and Chief Executive Officer.  "We achieved strong gains in sales and earnings and made significant progress on our strategic initiatives.  Total sales exceeded $1.6 billion and we achieved a 5.7% increase in comparable store sales, the highest percentage increase in over 10 years.  Driven by our record sales, adjusted earnings per share increased by 45% to a record $1.33."

New store growth included 25 traditional stores and 31 Steele's stores during the year.  Direct-To-Consumer sales increased 65% over last year.  A new loyalty program with enhanced cardholder benefits was introduced and new cards were reissued to more than 2 million customers.  Consistent with the Company's intent to increase distributions to its shareholders, Stage Stores quarterly dividend rate was increased by 11%.

As the Company noted in its news release on February 11, 2013, it started the process of consolidating its department store operations into its Houston corporate headquarters.  The Company expects the consolidation to increase efficiency, create synergies and enhance purchasing power and sales growth.  The Company projects annual savings from the consolidation to be approximately $5 million.
 
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Stage Stores Reports Record
Adjusted 2012 EPS
Page – 2


One-time items, which total approximately $6.9 million for the year, were due to the consolidation of the Company's South Hill, Virginia operations and the resignation of the Company's former Chief Executive Officer in March 2012.  Including these items, the Company's net income for the fiscal year was $38.2 million, or $1.19 per diluted share.  For the fourth quarter, the Company reported earnings of $35.8 million, or $1.09 per diluted share, compared to earnings of $32.7 million, or $1.05 per diluted share, for the prior year's fourth quarter.

"From an operational standpoint, we strengthened our executive management team with the addition of Steve Lawrence, our Chief Merchandising Officer, and Bill Gentner, our Chief Marketing Officer, and with the promotion of Russ Lundy to EVP, Stores," stated Mr. Glazer.  "Through their guidance and leadership, and in collaboration with the other members of the executive management team, we continue to make improvements to our merchandise, marketing and stores.

"As we enter 2013, we have great momentum and our inventory is well positioned for growth.  We have strategically increased our inventory investment to take advantage of several opportunities.  We clearly expect to see meaningful sales and earnings growth in 2013 and beyond," Mr. Glazer concluded.    

Financial highlights for FY 2012:
·
Total sales increased 8.9% to $1,646 million.  FY 2012 had 53 weeks while FY 2011 had 52 weeks.  The 53rd week in FY 2012 added $16 million to total sales.  On a 52 week basis, comparable store sales increased 5.7%.
·
Direct-To-Consumer sales increased 65% versus the prior year.  Direct-To-Consumer sales positively impacted the Company's same store sales by 0.5% in FY 2012.           
·
Adjusted gross profit, as a percentage of net sales, improved by 90 basis points compared with FY 2011.  The adjusted merchandise margin rate improved 20 basis points due to lower markdowns, while buying, occupancy and distribution costs improved 70 basis points due to leverage from  higher sales.
·
Adjusted selling, general and administrative expenses, as a percentage of net sales, increased by 20 basis points over FY 2011.  Leverage in store expenses and an improved benefit from the Company's private label credit card program were offset by an increase in incentive compensation costs.
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Stage Stores Reports Record
Adjusted 2012 EPS
Page – 3
·
Adjusted earnings per diluted share increased 45% to $1.33 over last year.  Including the one-time items, EPS was $1.19.  Adjusted net income was $42.6 million, a 37% increase compared to $31.0 million for last year.  Including the one-time items, net income was $38.2 million.  Diluted average shares outstanding for FY 2012 were 31.6 million compared to 33.3 million for FY 2011.

Fiscal 2013 Outlook
The Company expects that comparable store sales for the year will increase 2% to 4% and that EPS, excluding one-time items, will be in a range of $1.45 to $1.55.  The one-time items are associated with the consolidation of the Company's South Hill operations into its Houston headquarters and are estimated to be approximately $16 million, or $0.30 per diluted share, for the year.
 
 


   
FY 2013 OUTLOOK
  
FY 2012
Sales ($mm)
  
$1,689
-
$1,721
  
$1,646
             
Adjusted EPS
  
$1.45
-
$1.55
  
$1.33
             
Diluted Shares (m)
  
33,200
  
31,600

 
The Company added that it plans to open approximately 40 stores during the year, and expects net capital expenditures of approximately $57 million, compared to $45 million in FY 2012.   The increase in net capital expenditures is due to additional investments in existing stores for the upgrading of store fixtures and visual merchandising, the installation of additional cosmetics counters and IT initiatives.

Conference Call Information
The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter and full year results.  Interested parties can participate in the Company's conference call by dialing 703-639-1123.  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, March 22, 2013.

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Stage Stores Reports Record
Adjusted 2012 EPS
Page – 4


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, Stage and Steele's names, offer moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family. The Company operates 864 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 include comments regarding the Company's expectations for sales, comparable store sales, EPS and diluted share count for the 2013 fiscal year.  Forward-looking statements also include comments regarding the Company's expectations for the number of traditional and Steele's stores that it plans to open in the 2013 fiscal year, as well as the amount of net capital expenditures.  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 28, 2012, 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.
  
Consolidated Statements of Income
  
(in thousands, except per share data)
  
(Unaudited)
  
 
  
   
   
   
 
 
  
Fourteen Weeks Ended
    
Thirteen Weeks Ended
  
 
  
February 2, 2013
    
January 28, 2012
  
 
  
Amount
    
% to Sales (1)
    
Amount
    
% to Sales (1)
  
 
  
   
   
   
 
Net sales
  
$
527,899
      
100.0
%
  
$
479,096
      
100.0
%
Cost of sales and related buying, occupancy and distribution expenses
    
357,001
      
67.6
%
    
328,736
      
68.6
%
Gross profit
    
170,898
      
32.4
%
    
150,360
      
31.4
%
Selling, general and administrative expenses
    
112,768
      
21.4
%
    
97,163
      
20.3
%
Store opening costs
    
500
      
0.1
%
    
452
      
0.1
%
Interest expense, net of income of $0 and $0, respectively
    
661
      
0.1
%
    
1,015
      
0.2
%
Income before income tax
    
56,969
      
10.8
%
    
51,730
      
10.8
%
Income tax expense
    
21,176
      
4.0
%
    
19,016
      
4.0
%
Net income
  
$
35,793
      
6.8
%
  
$
32,714
      
6.8
%
 
                                
Basic and diluted earnings per share data:
                                
Basic earnings per share
  
$
1.10
            
$
1.06
          
Basic weighted average shares outstanding
    
31,957
              
30,432
          
 
                                
Diluted earnings per share
  
$
1.09
            
$
1.05
          
Diluted weighted average shares outstanding
    
32,376
              
30,603
          
 
                                
 
                                
 
                                
(1) Percentages may not foot due to rounding.
                                


Stage Stores, Inc.
  
Consolidated Statements of Income
  
(in thousands, except earnings per share)
  
(Unaudited)
  
 
  
   
   
   
 
 
  
Fifty-Three Weeks Ended
    
Fifty-Two Weeks Ended
  
 
  
February 2, 2013
    
January 28, 2012
  
 
  
Amount
    
% to Sales (1)
    
Amount
    
% to Sales (1)
  
 
  
   
   
   
 
Net sales
  
$
1,645,800
      
100.0
%
  
$
1,511,919
      
100.0
%
Cost of sales and related buying, occupancy and distribution expenses
    
1,186,025
      
72.1
%
    
1,101,319
      
72.8
%
Gross profit
    
459,775
      
27.9
%
    
410,600
      
27.2
%
Selling, general and administrative expenses
    
392,727
      
23.9
%
    
353,834
      
23.4
%
Store opening costs
    
3,657
      
0.2
%
    
5,670
      
0.4
%
Interest expense, net of income of $0 and $24, respectively
    
3,011
      
0.2
%
    
3,821
      
0.3
%
Income before income tax
    
60,380
      
3.7
%
    
47,275
      
3.1
%
Income tax expense
    
22,201
      
1.3
%
    
16,315
      
1.1
%
Net income
  
$
38,179
      
2.3
%
  
$
30,960
      
2.0
%
 
                                
Basic and diluted earnings per share data:
                                
Basic earnings per share
  
$
1.20
            
$
0.93
          
Basic weighted average shares outstanding
    
31,278
              
33,021
          
 
                                
Diluted earnings per share
  
$
1.19
            
$
0.92
          
Diluted weighted average shares outstanding
    
31,600
              
33,278
          
 
                                
 
                                
 
                                
(1) Percentages may not foot due to rounding.
                                

Stage Stores, Inc.
  
Consolidated Balance Sheets
  
(in thousands, except par value)
  
(Unaudited)
  
 
  
   
 
 
  
February 2, 2013
    
January 28, 2012
  
 
  
   
 
ASSETS
  
   
 
Cash and cash equivalents
  
$
17,937
    
$
18,621
  
Merchandise inventories, net
    
413,928
      
347,944
  
Prepaid expenses and other current assets
    
35,467
      
33,434
  
Total current assets
    
467,332
      
399,999
  
 
                
Property, equipment and leasehold improvements, net
    
292,801
      
300,717
  
Intangible asset
    
14,910
      
14,910
  
Other non-current assets, net
    
21,928
      
19,713
  
Total assets
  
$
796,971
    
$
735,339
  
 
                
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Accounts payable
  
$
110,826
    
$
106,022
  
Income taxes payable
    
14,929
      
6,187
  
Current portion of debt obligations
    
744
      
13,782
  
Accrued expenses and other current liabilities
    
83,673
      
60,308
  
Total current liabilities
    
210,172
      
186,299
  
 
                
Long-term debt obligations
    
11,585
      
35,721
  
Deferred taxes
    
19,461
      
17,830
  
Other long-term liabilities
    
90,883
      
82,783
  
Total liabilities
    
332,101
      
322,633
  
 
                
Commitments and contingencies
                
 
                
Common stock, par value $0.01, 100,000 shares authorized,
                
32,014 and 30,444 shares issued, respectively
    
320
      
304
  
Additional paid-in capital
    
376,615
      
349,366
  
Less treasury stock - at cost, 0 and 0 shares, respectively
    
(701
)
    
(835
)
Accumulated other comprehensive loss
    
(6,135
)
    
(4,748
)
Retained earnings
    
94,771
      
68,619
  
Total stockholders' equity
    
464,870
      
412,706
  
Total liabilities and stockholders' equity
  
$
796,971
    
$
735,339
  
 
                
 
 
Stage Stores, Inc.
  
Consolidated Statements of Cash Flows
  
(in thousands)
  
(Unaudited)
  
 
  
Fifty-Three
    
Fifty-Two
  
 
  
Weeks Ended
    
Weeks Ended
  
 
  
February 2, 2013
    
January 28, 2012
  
Cash flows from operating activities:
  
   
 
Net income
  
$
38,179
    
$
30,960
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, amortization, and impairment of long-lived assets
    
60,426
      
61,680
  
Loss (gain) on retirements of property and equipment
    
454
      
(101
)
Deferred income taxes
    
1,107
      
6,768
  
Tax (deficiency) benefit from stock-based compensation
    
(1,311
)
    
738
  
Stock-based compensation expense
    
7,803
      
7,690
  
Amortization of debt issuance costs
    
417
      
347
  
Excess tax benefits from stock-based compensation
    
(1,024
)
    
(1,339
)
Deferred compensation obligation
    
(134
)
    
134
  
Amortization of employee benefit related costs
    
414
      
592
  
Construction allowances from landlords
    
4,193
      
4,499
  
Changes in operating assets and liabilities:
                
Increase in merchandise inventories
    
(65,984
)
    
(22,443
)
Increase in other assets
    
(4,801
)
    
(4,369
)
Increase (decrease) in accounts payable and other liabilities
    
36,242
      
(7,101
)
Total adjustments
    
37,802
      
47,095
  
Net cash provided by operating activities
    
75,981
      
78,055
  
 
                
Cash flows from investing activities:
                
Additions to property, equipment and leasehold improvements
    
(49,489
)
    
(45,731
)
Proceeds from insurance and retirements of property and equipment
    
50
      
413
  
Net cash used in investing activities
    
(49,439
)
    
(45,318
)
 
                
Cash flows from financing activities:
                
Proceeds from revolving credit facility borrowings
    
357,910
      
238,800
  
Payments of revolving credit facility borrowings
    
(376,410
)
    
(214,300
)
Payments of long-term debt obligations
    
(18,674
)
    
(13,489
)
Payments of debt issuance costs
    
-
      
(1,149
)
Repurchases of common stock
    
(387
)
    
(110,919
)
Proceeds from exercise of stock awards
    
21,306
      
7,286
  
Excess tax benefits from stock-based compensation
    
1,024
      
1,339
  
Cash dividends paid
    
(11,995
)
    
(11,033
)
Net cash used in financing activities
    
(27,226
)
    
(103,465
)
Net decrease in cash and cash equivalents
    
(684
)
    
(70,728
)
 
                
Cash and cash equivalents:
                
Beginning of period
    
18,621
      
89,349
  
End of period
  
$
17,937
    
$
18,621
  
 
                
Stage Stores, Inc.
  
Reconciliation of Non-GAAP Financial Measures
  
(in millions, except earnings per share)
  
(Unaudited)
  
 
  
   
 
 
  
Fifty-Three Weeks Ended
    
Fifty-Two
 Weeks Ended
  
 
  
February 2, 2013
    
January 28, 2012
  
 
  
   
 
Net income
  
   
 
On a U.S. GAAP basis
  
$
38.2
    
$
31.0
  
South Hill consolidation related charges, net of tax of $1.4
    
2.3
      
-
  
Former Chief Executive Officer resignation related charges, net of tax of $1.2
    
2.1
      
-
  
On a non-U.S. GAAP basis
  
$
42.6
    
$
31.0
  
 
                
Diluted earnings per share:
                
On a U.S. GAAP basis
  
$
1.19
    
$
0.92
  
South Hill consolidation related charges
    
0.07
      
-
  
Former Chief Executive Officer resignation related charges
    
0.07
      
-
  
On a non-U.S. GAAP basis
  
$
1.33
    
$
0.92