Stage Stores Announces Second Quarter Results; Company Provides Third Quarter, Fourth Quarter and Full Year Earnings Guidance.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- Stage Stores, Inc. (Nasdaq:STGS STGS Space Telescope Ground System STGS Status of Ground Station ) today reported that net income for the second quarter ended July July: see month. 31, 2004 was $5.9 million, or $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which was in line with the Company's previously provided guidance. The year-ago level of $9.1 million, or $0.45 per diluted share, is not fully comparable due to the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the Company's private label credit card operations in September September: see month. 2003, and the subsequent acquisition of Peebles Peebles, town, Scotland Peebles (pē`bəlz), town (1991 pop. 6,750), Scottish Borders, S Scotland, at the confluence of Eddleston Water and the Tweed River. It is a mountain resort and a farm market with woolen mills. Inc. in November November: see month. 2003. Total sales for the 13-week period, which include sales for the Peebles stores in the current year's results, increased 34.8% to $279.9 million from $207.7 million last year. Comparable store sales, which include comparable store sales for the Peebles stores in both years, decreased 3.2% versus a decrease of 2.4% for the same period last year. The Company noted that the year-over-year sales comparison for the quarter was also made difficult by the calendar shift in the Texas sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. holiday weekend, which produced approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8.0 million of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales in the prior year's second quarter, and represented approximately 2.9% of the period's comparable store sales. Jim Scarborough Scarborough, town (1991 pop. 36,665) and district, North Yorkshire, NE England, on the North Sea. The town, primarily a resort, is also an important conference and retirement center. The area was recognized at an early time for its strategic location. , Chairman, President and Chief Executive Officer, commented, "Our results for the second quarter were impacted by several key factors. As we have previously reported, unseasonably cool temperatures and heavy rains and flooding Refers to various denial-of-service techniques that saturate a critical resource, leading either to system failure or to the exclusion of legitimate access. See e-mail bombing, Fraggle attack, smurf attack and SYN-flood attack. conditions that occurred during May and June June: see month. caused our sales in those months to come in below our expectations. As a result, we entered July with higher than planned levels of spring and summer goods. We responded by taking more aggressive mark-downs to drive business and reduce our seasonal inventories. The higher mix of clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel sales negatively impacted our gross margin performance, which translated into lower earnings for the quarter as compared to last year." Mr. Scarborough concluded, "Our heightened clearance activities during July reduced our inventories of spring and summer goods, and positions us well as we enter the third quarter. Additionally, we are pleased with our product assortments for back-to-school and the fall season, and we remain upbeat about our prospects for the second half of the year. However, while we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op , we are trending below our sales plans for August, and no one knows at this point what impact, if any, external factors, including higher interest rates, will have on the consumer. For our part, we will continue to do what we do best, which is to provide our customers with exceptional service, merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain selection and value in stores that are conveniently located." Total sales for the six-month period ended July 31, 2004, which include sales for the Peebles stores in the current year's results, increased 40.4% to $569.5 million from $405.7 million last year. Comparable store sales, which include comparable store sales for the Peebles stores in both years, increased 0.6% versus a decrease of 4.6% for the prior year. Net income for the 26-week period was $24.8 million, or $1.22 per diluted share, compared to $22.5 million, or $1.14 per diluted share, for the same period last year. Store Activity The Company reported that it remodeled 12 stores and completed one expansion during the quarter. The Company further reported that it plans to open 7 new stores in the third quarter, and an additional 9 new stores in the fourth quarter. These second half store openings will bring the total number of stores opened during fiscal 2004 to 22. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program The Company also reported that, through August 18, 2004, it had repurchased 1.9 million shares of its common stock under its current Stock Repurchase Program, at an aggregate purchase price of approximately $68.4 million. Fiscal 2004 - Third Quarter, Fourth Quarter and Full Year Outlook Fiscal 2004 - 3rd Quarter: In providing guidance for the fiscal 2004 third quarter, the Company noted that its third quarter sales and earnings results reflect the benefit from the calendar shift in the Texas sales tax holiday weekend from August 1st through August 3rd of last year to August 6th through August 8th of this year. The Company also noted that its third quarter gross margin should benefit from the fact that, during the second quarter, it recorded the mark-downs on clearance goods that will continue to be sold in the third quarter. For the third quarter ending October October: see month. 30, 2004, the Company currently anticipates reporting revenues in the range of $282 to $288 million, which would reflect a comparable store sales increase in the mid-single digits range. Net income is currently estimated to be in the range of $10.6 to $11.8 million, or earnings of $0.54 to $0.60 per diluted share. This outlook compares to earnings of $12.9 million, or $0.63 per diluted share, for the prior year third quarter, which included a net gain of $7.8 million, or $0.38 per diluted share, related to the sale of the Company's credit card portfolio. In projecting earnings per share for the fiscal 2004 third quarter, the Company used an estimated diluted share count of 19.6 million shares. Fiscal 2004 - 4th Quarter: For the fourth quarter ending January January: see month. 29, 2005, the Company currently anticipates reporting revenues in the range of $373 to $382 million, which would reflect a comparable store sales increase in the low single digits range. Net income is currently estimated to be in the range of $17.6 to $20.4 million, or earnings of $0.90 to $1.04 per diluted share. This outlook compares to earnings of $19.6 million, or $0.94 per diluted share, for the prior year fourth quarter. In projecting earnings per share for the fiscal 2004 fourth quarter, the Company used an estimated diluted share count of 19.6 million shares. Fiscal 2004 - Full Year: Updating its outlook for the full 2004 fiscal year ending January 29, 2005 to include actual second quarter results, the Company currently anticipates reporting revenues in the range of $1.225 to $1.240 billion, with the expectation of comparable store sales increases in the low single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. range. Net income is currently estimated to be in the range of $53.0 to $57.0 million, or earnings of $2.65 to $2.85 per diluted share. This outlook compares to earnings of $55.0 million, or $2.73 per diluted share, for the full 2003 fiscal year, which included a net gain of $7.8 million, or $0.38 per diluted share, related to the sale of the Company's credit card portfolio. In projecting earnings per share for the full 2004 fiscal year, the Company used an estimated diluted share count of 20.0 million shares. Conference Call Information The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss the second quarter's results as well as its outlook for the second half of the 2004 fiscal year. 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 Investor relations The process by which the corporation communicates with its investors. , 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 Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. , 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 Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 27, 2004. Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics cosmetics, preparations externally applied to change or enhance the beauty of skin, hair, nails, lips, and eyes. The use of body paint for ornamental and religious purposes has been common among primitive peoples from prehistoric times (see body-marking). and footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). for the entire family to small towns and communities through 515 stores located in 27 states. The Company operates under the Stage, Bealls Bealls is the name of two unrelated United States retail chains:
The Palais Royal is a palace and garden located near the Ier arrondissement of Paris. names throughout the South Central states, and under the Peebles name throughout the Mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic , Southeastern south·east n. 1. Abbr. SE The direction or point on the mariner's compass halfway between due south and due east, or 135° east of due north. 2. An area or region lying in the southeast. 3. and Midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and states. For more information about Stage Stores, visit the Company's web site at www.stagestoresinc.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement This news release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including comments regarding the Company's outlook and expectations for the third quarter of the 2004 fiscal year, the fourth quarter of the 2004 fiscal year and for the full 2004 fiscal year. The Company intends forward looking terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. as filed with the Securities and Exchange Commission (the "SEC") on April 15, 2004, in the Company's Quarterly Reports on Form 10-Q Form 10-Q See 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.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Quarter Ended
-------------------------------
July 31, 2004 August 2, 2003
--------------- ---------------
Amount % to Amount % to
Sales Sales
--------------- ---------------
Net sales $279,872 100.0% $207,721 100.0%
Cost of sales and related buying,
occupancy and distribution expenses 206,559 73.8% 149,397 71.9%
--------------- ---------------
Gross profit 73,313 26.2% 58,324 28.1%
Selling, general and administrative
expenses 63,359 22.6% 43,303 20.8%
Store opening costs 27 0.0% 247 0.1%
Interest, net 518 0.2% 411 0.2%
--------------- ---------------
Income before income tax 9,409 3.4% 14,363 6.9%
Income tax 3,481 1.2% 5,243 2.5%
--------------- ---------------
Net income $5,928 2.1% $9,120 4.4%
=============== ===============
Basic & Diluted earnings per share
data:
Basic earnings per share $0.33 $0.48
========= =========
Basic weighted average shares
outstanding 18,194 18,905
========= =========
Diluted earnings per share $0.30 $0.45
========= =========
Diluted weighted average shares
outstanding 20,016 20,048
========= =========
Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Twenty-Six Weeks Ended
-------------------------------
July 31, 2004 August 2, 2003
--------------- ---------------
Amount % to Amount % to
Sales Sales
--------------- ---------------
Net sales $569,530 100.0% $405,708 100.0%
Cost of sales and related buying,
occupancy and distribution expenses 399,147 70.1% 284,883 70.2%
--------------- ---------------
Gross profit 170,383 29.9% 120,825 29.8%
Selling, general and administrative
expenses 129,672 22.8% 83,818 20.7%
Store opening costs 341 0.1% 756 0.2%
Interest, net 931 0.2% 808 0.2%
--------------- ---------------
Income before income tax 39,439 6.9% 35,443 8.7%
Income tax 14,592 2.6% 12,937 3.2%
--------------- ---------------
Net income $24,847 4.4% $22,506 5.5%
=============== ===============
Basic & Diluted earnings per share
data:
Basic earnings per share $1.34 $1.19
========= =========
Basic weighted average shares
outstanding 18,559 18,891
========= =========
Diluted earnings per share $1.22 $1.14
========= =========
Diluted weighted average shares
outstanding 20,381 19,800
========= =========
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(unaudited)
July 31, January 31,
2004 2004
---------- -----------
ASSETS
------------------------------------------------
Cash and cash equivalents $ 17,367 $ 14,733
Accounts receivable - 35,112
Merchandise inventories, net 286,988 259,687
Current deferred tax assets 24,897 27,701
Prepaid expenses and other current assets 19,840 26,071
-------- --------
Total current assets 349,092 363,304
Property, equipment and leasehold improvements,
net 189,514 190,958
Goodwill 80,054 80,054
Intangible asset 14,910 14,910
Other long-term assets 10,962 10,021
-------- --------
Total assets $644,532 $659,247
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------
Accounts payable $ 70,766 $ 75,685
Income taxes payable 8,989 2,598
Current portion of long-term debt 150 381
Accrued expenses and other current liabilities 55,958 54,083
-------- --------
Total current liabilities 135,863 132,747
Long-term debt 18,490 11,242
Deferred tax liabilities 13,628 14,028
Other long-term liabilities 28,032 28,156
-------- --------
Total liabilities 196,013 186,173
-------- --------
Commitments and contingencies
Common stock, par value $0.01, 50,000 shares
authorized, 20,868 and 20,579 shares issued 209 206
Additional paid-in capital 382,300 374,645
Less treasury stock - at cost (2,947 and 1,414
shares, respectively) (90,187) (33,127)
Retained earnings 156,197 131,350
-------- --------
Stockholders' equity 448,519 473,074
-------- --------
Total liabilities and stockholders' equity $644,532 $659,247
======== ========
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Twenty-Six Twenty-Six
Weeks Ended Weeks Ended
July 31, 2004 August 2, 2003
------------- --------------
Cash flows from operating activities:
Net income $ 24,847 $ 22,506
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,787 10,597
Amortization of debt issue costs 223 667
Deferred stock compensation 115 -
Provision for bad debts 311 13,943
Deferred income taxes 2,403 3,228
Proceeds from sale of private label credit
card portfolio, net 34,764 -
Changes in operating assets and liabilities:
Decrease in accounts receivable and
retained interest in receivables sold 3,537 33,303
Increase in merchandise inventories (27,301) (11,904)
Decrease in other assets 4,996 230
Increase (decrease) in accounts payable
and other liabilities 2,806 (3,835)
------------ --------
Total adjustments 37,641 46,229
------------ --------
Net cash provided by operating activities 62,488 68,735
------------ --------
Cash flows from investing activities:
Additions to property, equipment and
leasehold improvements (14,272) (12,678)
------------ --------
Net cash used in investing activities (14,272) (12,678)
------------ --------
Cash flows from financing activities:
Proceeds from (payments on):
Revolving credit facility, net 7,790 -
Repurchase of accounts receivable from
accounts receivable trust - (57,000)
Long-term debt (773) (200)
Repurchase of common stock (57,060) 740
Exercise of stock options proceeds 4,461 -
------------ --------
Net cash used in financing activities (45,582) (56,460)
------------ --------
Net increase (decrease) in cash and cash
equivalents 2,634 (403)
Cash and cash equivalents:
Beginning of period 14,733 20,886
------------ --------
End of period $ 17,367 $ 20,483
============ ========
Supplemental disclosures:
Interest paid $ 389 $ 463
============ ========
Income taxes paid $ 3,176 $ 3,286
============ ========
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