The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

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

Tuesday, March 12, 2013

Stage Stores Reports Record Adjusted 2012 EPS of $1.33, 45% Higher Than 201106:00 EDT Tuesday, March 12, 2013 HOUSTON (Business Wire) -- 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. 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. 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 $0.30 per diluted share, for the year.                                 FY 2013 OUTLOOKFY 2012 Sales ($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. 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 Fifty-Two Weeks Ended 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   Stage Stores, Inc.Bob Aronson, 800-579-2302Vice President, Investor Relationsbaronson@stagestores.com