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Press release from Business Wire

Stage Stores Reports 19% Increase in Fourth Quarter EPS and 32% Increase in Full Year EPS

<p class='bwalignc'> <b>Announces New $200 Million Stock Repurchase Program</b> </p>

Tuesday, March 08, 2011

Stage Stores Reports 19% Increase in Fourth Quarter EPS and 32% Increase in Full Year EPS06:00 EST Tuesday, March 08, 2011 HOUSTON (Business Wire) -- Stage Stores, Inc. (NYSE:SSI) today reported net income for the fourth quarter ended January 29, 2011 of $32.0 million versus $27.9 million for the prior year fourth quarter ended January 30, 2010. Diluted earnings per share for the quarter increased 19% to $0.86 this year from $0.72 last year. For the 2010 fiscal year, the Company reported net income of $37.6 million versus $28.7 million for the 2009 fiscal year. Diluted earnings per share for the year increased 32% to $0.99 this year from $0.75 last year. The Company also reported today that it completed its $25 million Stock Repurchase Program during the fourth quarter. The Company repurchased approximately 0.3 million shares during the quarter. In total, the Company repurchased approximately 2.0 million shares under its $25 million Stock Repurchase Program. Commenting on the Company's fourth quarter and full year results, Andy Hall, President and Chief Executive Officer, stated, “We are very pleased with our 19% increase in fourth quarter earnings per share. The improved EPS was primarily driven by a 5.1% increase in total sales coupled with a 130 basis point improvement in our gross profit rate. “We are also very pleased with our 32% increase in earnings per share for the year. A 2.7% increase in total sales combined with a 90 basis point improvement in our gross profit rate accounted for most of the year-over-year improvement in EPS. “We continued to make progress on our key growth initiatives during the year: Growth of the Goody's nameplate - we opened 33 new stores, 30 of which were opened under the Goody's name. We also rebranded 26 non-Goody's stores with the Goody's name. In all, we ended the year with 71 Goody's stores. We continue to be very pleased with the performance of both our new and rebranded Goody's stores. Cosmetics - we added eight Estee Lauder and seventeen Clinique counters during the year, ending with 176 and 169 counters, respectively. Markdown optimization – we began the roll-out of our markdown optimization tool and expect to be completed in early spring 2011. eCommerce - we successfully launched our eCommerce platform in the fourth quarter. The initial customer interest and sales activity exceeded our expectations. Shareholder value - we increased our quarterly dividend rate by 50% and completed our $25 million stock repurchase program.” Mr. Hall concluded, “We are proud of our associates and their many achievements this year. We have momentum as we embark on 2011 and we have confidence in our ability to meet our 2011 objective of continued growth.” Fiscal 2011 - First Quarter and Full Year Projections The Company is projecting first quarter comparable store sales to increase 1% to 3%. Within the quarter, the Company expects comparable store sales for March to be down mid single digits, and for April to be up double digits, due to the Easter calendar shift. The Company noted that the EPS and diluted shares projections do not include any impact from its new Stock Repurchase Program. 1st Quarter 2011:   1Q 2011 OUTLOOK     1Q 2010 ACTUAL Sales ($mm) $350 - $356 $340   Diluted EPS $0.06 - $0.08 $0.06   Diluted Shares (m) 37,000 38,773 For the 2011 fiscal year, comparable store sales for the fiscal year are expected to increase 1% to 3%. The Company is planning to open 35 – 40 new stores and anticipates spending $40 million in net capital expenditures. FY 2011:   FY 2011 OUTLOOK     FY 2010 ACTUAL Sales ($mm) $1,514 - $1,543 $1,471   Diluted EPS $1.07 - $1.17 $0.99   Diluted Shares (m) 37,150 38,010 $200 Million Stock Repurchase Program The Company announced today that its Board of Directors has approved a new Stock Repurchase Program which authorizes the Company to repurchase up to $200 million of its outstanding common stock. Commenting on the Company's new $200 million Stock Repurchase Program, Mr. Hall stated, “Our strong balance sheet and cash flow allow us to undertake a significant new stock repurchase program. The $200 million authorization represents approximately one third of our current market value. Our intention is to repurchase up to $100 million of our shares during 2011 and to complete the program by the end of 2013. Our new stock repurchase program is consistent with our philosophy of deploying capital in a way that benefits our shareholders. Today's announcement reflects the strength of our business model and reaffirms our confidence and optimism in the long term future of our company.” Under the Company's new $200 million Stock Repurchase Program, the Company may repurchase its outstanding common stock from time to time up to the approved amount, either on the open market or through privately negotiated transactions. The Stock Repurchase Program will be financed by the Company's existing cash, cash flow and other liquidity sources, as appropriate. Since the specific timing and amount of repurchases will vary based on market conditions and other factors, there can be no assurance as to the amount, timing or prices of these stock repurchases. Additionally, this Stock Repurchase Program may be modified, extended or terminated by the Company's Board of Directors at any time. Conference Call Information The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter results. Interested parties can participate in the Company's conference call by dialing 703-639-1129. 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, then the webcast link. A replay of the conference call will be available online until midnight on Friday, March 18, 2011. 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 784 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 stores that the Company plans to open in fiscal 2011. Forward-looking statements also include comments regarding the Company's outlook for comparable store sales in March and April. Forward-looking statements also include comments regarding the Company's sales, earnings and diluted share count projections for the first quarter of the 2011 fiscal year and full 2011 fiscal year, as well as comments regarding the estimated amount of capital expenditures for the full 2011 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, 2010, 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. Stage Stores, Inc.Consolidated Statements of Income (in thousands, except per share data) (Unaudited)               Thirteen Weeks Ended January 29, 2011 January 30, 2010 Amount % to Sales (1) Amount % to Sales (1)   Net sales $ 453,679 100.0 % $ 431,680 100.0 % Cost of sales and related buying, occupancy and distribution expenses   307,490 67.8 %   298,101 69.1 % Gross profit 146,189 32.2 % 133,579 30.9 % Selling, general and administrative expenses 93,834 20.7 % 87,869 20.4 % Store opening costs 168 0.0 % 216 0.1 % Interest expense, net of income of $17 and $19, respectively   896 0.2 %   1,010 0.2 % Income before income tax 51,291 11.3 % 44,484 10.3 % Income tax expense   19,311 4.3 %   16,632 3.9 % Net income $ 31,980 7.0 % $ 27,852 6.5 %   Basic and diluted earnings per share data: Basic earnings per share $ 0.87 $ 0.73 Basic weighted average shares outstanding   36,629   38,033   Diluted earnings per share $ 0.86 $ 0.72 Diluted weighted average shares outstanding   37,083   38,446     (1) Percentages may not foot due to rounding.   Stage Stores, Inc.Consolidated Statements of Income (in thousands, except per share data) (Unaudited)               Fifty-Two Weeks Ended January 29, 2011 January 30, 2010 Amount % to Sales (1) Amount % to Sales (1)   Net sales $ 1,470,590 100.0 % $ 1,431,927 100.0 % Cost of sales and related buying, occupancy and distribution expenses   1,053,766 71.7 %   1,040,120 72.6 % Gross profit 416,824 28.3 % 391,807 27.4 % Selling, general and administrative expenses 350,865 23.9 % 338,551 23.6 % Store opening costs 3,192 0.2 % 3,041 0.2 % Interest expense, net of income of $88 and $96, respectively   3,875 0.3 %   4,388 0.3 % Income before income tax 58,892 4.0 % 45,827 3.2 % Income tax expense   21,252 1.4 %   17,106 1.2 % Net income $ 37,640 2.6 % $ 28,721 2.0 %   Basic and diluted earnings per share data: Basic earnings per share $ 1.00 $ 0.76 Basic weighted average shares outstanding   37,656   38,029   Diluted earnings per share $ 0.99 $ 0.75 Diluted weighted average shares outstanding   38,010   38,413     (1) Percentages may not foot due to rounding.   Stage Stores, Inc.Consolidated Balance Sheets (in thousands, except par value) (Unaudited)       January 29, 2011 January 30, 2010   ASSETS Cash and cash equivalents $ 89,349 $ 93,714 Merchandise inventories, net 325,501 306,360 Current deferred taxes - 2,535 Prepaid expenses and other current assets   30,423     24,560   Total current assets 445,273 427,169   Property, equipment and leasehold improvements, net 317,954 342,001 Intangible asset 14,910 14,910 Other non-current assets, net   17,947     16,351   Total assets $ 796,084   $ 800,431     LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 95,365 $ 100,602 Income taxes payable 9,905 12,752 Current portion of debt obligations 13,490 12,726 Accrued expenses and other current liabilities   61,661     56,936   Total current liabilities 180,421 183,016   Long-term debt obligations 25,002 38,492 Deferred taxes 17,151 11,899 Other long-term liabilities   84,001     90,978   Total liabilities   306,575     324,385     Commitments and contingencies   Common stock, par value $0.01, 100,000 shares authorized, 56,946 and 56,080 shares issued, respectively 569 561 Additional paid-in capital 516,079 501,800 Less treasury stock - at cost, 20,508 and 18,071 shares, respectively (320,055 ) (288,079 ) Accumulated other comprehensive loss (2,935 ) (5,897 ) Retained earnings   295,851     267,661   Total stockholders' equity   489,509     476,046   Total liabilities and stockholders' equity $ 796,084   $ 800,431     Stage Stores, Inc.Consolidated Statements of Cash Flows (in thousands) (Unaudited)       Fifty-Two Weeks Ended January 29, 2011 January 30, 2010   Cash flows from operating activities: Net income $ 37,640 $ 28,721 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and impairment of long-lived assets 62,417 63,459 Loss (gain) on retirements of property, equipment and leasehold improvements 169 (1,460 ) Deferred income tax expense 6,300 2,443 Tax benefits (deficiency) from stock-based compensation 1,081 (872 ) Stock-based compensation expense 6,775 6,659 Amortization of debt issuance costs 298 290 Excess tax benefits from stock-based compensation (2,172 ) (136 ) Deferred compensation obligation 85 121 Amortization of employee benefit related costs 427 520 Construction allowances from landlords 5,476 3,875 Changes in operating assets and liabilities: (Increase) decrease in merchandise inventories (19,141 ) 8,157 (Increase) decrease in other assets (8,216 ) 1,938 (Decrease) increase in accounts payable and other liabilities   (13,264 )   7,221   Total adjustments   40,235     92,215   Net cash provided by operating activities   77,875     120,936     Cash flows from investing activities: Additions to property, equipment and leasehold improvements (36,990 ) (42,707 ) Proceeds from insurance and retirements of property, equipment and leasehold improvements   531     2,954   Net cash used in investing activities   (36,459 )   (39,753 )   Cash flows from financing activities: Proceeds from revolving credit facility borrowings 4,300 139,278 Payments of revolving credit facility borrowings (4,300 ) (139,278 ) Proceeds from long-term debt obligations - 5,585 Payments of long-term debt obligations (12,726 ) (11,379 ) Payments of debt issuance costs - (40 ) Repurchases of common stock (31,976 ) (1,327 ) Proceeds from exercise of stock awards 6,199 907 Excess tax benefits from stock-based compensation 2,172 136 Cash dividends paid   (9,450 )   (7,629 ) Net cash used in financing activities   (45,781 )   (13,747 ) Net (decrease) increase in cash and cash equivalents (4,365 ) 67,436   Cash and cash equivalents: Beginning of period   93,714     26,278   End of period $ 89,349   $ 93,714   Stage Stores, Inc.Bob Aronson, 800-579-2302Vice President, Investor Relationsbaronson@stagestores.com