Stage Stores (NASDAQ:STGS)
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Stage Stores, Inc. (Nasdaq:STGS) today reported that
total sales for the third quarter ended October 29, 2005 rose 7.3% to
$306.0 million from $285.3 million for the prior year third quarter
ended October 30, 2004. The increase in third quarter sales was driven
by a comparable store sales gain of 3.9%, as well as revenue generated
by new stores.
The Company further reported that net income increased to $9.1
million, or $0.31 per diluted share, versus $8.9 million, or $0.30 per
diluted share, last year.
Jim Scarborough, Chairman, President and Chief Executive Officer,
commented, "Despite unseasonably warm weather during much of August
and September, and the significant business disruptions we experienced
due to two major Gulf Coast hurricanes, we managed to grow our
comparable store sales by 3.9%, while our total sales increased by
7.3%, to $306.0 million. Most of our key merchandise categories
achieved comparable store sales gains during the period, with our
women's special sizes once again leading the way with a 14.7%
increase. Additionally, our Peebles stores continued to benefit from
our sales productivity initiatives, and each of our small, mid-size
and large market store groups posted positive comparable store sales
results."
Mr. Scarborough continued, "We also accomplished a number of
important strategic and operational objectives during the quarter. We
opened eleven new stores and expanded our geographic presence to
thirty-one states by entering Connecticut and Georgia. We also
relocated six stores, remodeled four stores and expanded one store.
Unfortunately, we had to close four stores due to damage that they
sustained during hurricanes Katrina and Rita, but we currently expect
to reopen all of them during 2006. In August, we completed our
three-for-two stock split. In September, we issued our first quarterly
cash dividend in the amount of 2.5 cents per share. In October, we
completed our $30 million Stock Repurchase Program. We also launched
our initial two-store test of Clinique, by Estee Lauder in October in
our Stage Division, and we are very pleased with our results.
Additionally, we continued to make progress on our Peebles South Hill,
Virginia distribution center and merchandising system initiatives, and
we expect to complete both in January. Lastly, from a humanitarian
perspective, we reached out to those whose lives were affected by
hurricanes Katrina and Rita. Through a combination of internal
initiatives and relief efforts, we provided significant assistance to
those in need to help make their recovery a little easier."
Mr. Scarborough concluded, "Considering the challenges presented
to us by the natural disasters during the quarter, I want to thank
each of our 13,000 associates for their hard work, their charitable
giving, and their dedication."
Total sales for the nine-month period ended October 29, 2005
increased 8.3% to $925.5 million from $854.8 million last year.
Comparable store sales increased 5.3% versus an increase of 1.8% for
the prior year. Net income for the period was $36.2 million, or $1.22
per diluted share, compared to $32.8 million, or $1.09 per diluted
share, last year.
Stock Repurchase Program
The Company reported that, during the third quarter, it
repurchased 1,260,549 shares of its common stock at a total cost of
$33.6 million, resulting in an average price paid of $26.65 per share.
The Company noted that the shares were repurchased using a combination
of its $30.0 million Stock Repurchase Program, which has now been
completed, and $3.6 million of proceeds that it received from the
exercise of employee stock options. The 1.3 million shares repurchased
in the third quarter raises the total number of shares that have been
repurchased to date by the Company to approximately 6.5 million
shares.
Fiscal 2005 -- Fourth Quarter and Full Year Outlook
Fiscal 2005 -- 4th Quarter:
The Company reaffirmed comfort with its previously provided sales
and net income outlook ranges for the fourth quarter ending January
28, 2006 of $406.0 to $414.0 million, and $18.5 to $19.5 million,
respectively, with the expectation of a comparable store sales
increase in the low single digits. However, due to an anticipated
higher diluted share count for the fourth quarter as compared to the
Company's previous estimate, principally due to a higher stock price
assumption, diluted earnings per share are now projected to be in a
range of $0.64 to $0.67. In projecting diluted earnings per share, the
Company used a diluted share count of 28.9 million shares, which is up
from the 28.6 million shares used previously. This compares to the
Company's previously provided earnings guidance for the fourth quarter
of $0.65 to $0.68 per diluted share. The Company earned $18.6 million,
or $0.62 per diluted share, last year.
In comparing this year's fourth quarter earnings outlook to last
year's actual results, the Company noted that its fourth quarter
projections include non-recurring costs expected to be incurred
principally in connection with the closure of its Knoxville, Tennessee
distribution center, as well as expenses associated with improvements
being made to its South Hill, Virginia distribution center and
merchandising system, of approximately $0.8 million, or $0.03 per
diluted share, on an after tax basis.
Fiscal 2005 -- Full Year:
Updating its outlook for the 2005 fiscal year ending January 28,
2006 to include actual results for the first three quarters of the
year, the Company currently anticipates reporting revenues in the
range of $1.332 to $1.340 billion, with the expectation of a
comparable store sales increase in the upper low single digits. Net
income is currently estimated to be in the range of $54.7 to $55.7
million, or earnings of $1.85 to $1.89 per diluted share, using an
estimated diluted share count of 29.5 million shares. This outlook
compares to earnings of $51.4 million, or $1.72 per diluted share, for
the 2004 fiscal year.
Conference Call Information
The Company will host a conference call today at 8:30 a.m. Eastern
Time to discuss the third quarter's results. Interested parties can
participate in the Company's conference call by dialing 703-639-1213.
Alternatively, interested parties can listen to a live webcast of the
conference call by logging on to the Company's web site at
www.stagestores.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, November 25, 2005.
About Stage Stores
Stage Stores, Inc. brings nationally recognized brand name
apparel, accessories, cosmetics and footwear for the entire family to
small towns and communities through 554 stores located in 31 states.
The Company operates under the Bealls, Palais Royal and Stage names
throughout the South Central states, and under the Peebles name
throughout the Mid-Atlantic, Southeastern and Midwestern states. For
more information about Stage Stores, visit the Company's web site at
www.stagestores.com.
"Safe Harbor" Statement
This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995,
including comments regarding the Company's outlook and expectations
for the fourth quarter of the 2005 fiscal year and for the full 2005
fiscal year. The Company intends forward looking terminology 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 as
filed with the Securities and Exchange Commission (the "SEC") on April
28, 2005, in the Company's Quarterly Reports on Form 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)
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Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Thirteen Weeks Ended
---------------------------------
October 29, 2005 October 30, 2004
---------------- ----------------
Amount % to Amount % to
Sales Sales
(1) (1)
--------- ------ --------- ------
Net sales $306,044 100.0% $285,296 100.0%
Cost of sales and related buying,
occupancy and distribution expenses 215,328 70.4% 201,170 70.5%
-------- ------ -------- ------
Gross profit 90,716 29.6% 84,126 29.5%
Selling, general and administrative
expenses 73,936 24.2% 68,160 23.9%
Store pre-opening costs 1,293 0.4% 1,065 0.4%
Interest expense, net of interest
income of $8 and $0, respectively 971 0.3% 774 0.3%
-------- ------ -------- ------
Income before income tax 14,516 4.7% 14,127 5.0%
Income tax expense 5,371 1.8% 5,227 1.8%
-------- ------ -------- ------
Net income $ 9,145 3.0% $ 8,900 3.1%
======== ====== ======== ======
(1) Percentages may not foot due to rounding.
Basic and diluted earnings per share
data:
Basic earnings per share $ 0.34 $ 0.33
======== ========
Basic weighted average shares
outstanding 27,030 26,794
======== ========
Diluted earnings per share $ 0.31 $ 0.30
======== ========
Diluted weighted average shares
outstanding 29,502 29,246
======== ========
Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Thirty-Nine Weeks Ended
---------------------------------
October 29, 2005 October 30, 2004
---------------- ----------------
Amount % to Amount % to
Sales Sales
(1)
--------- ------ --------- ------
Net sales $925,534 100.0% $854,826 100.0%
Cost of sales and related buying,
occupancy and distribution expenses 647,888 70.0% 601,574 70.4%
--------- ------ --------- ------
Gross profit 277,646 30.0% 253,252 29.6%
Selling, general and administrative
expenses 215,144 23.2% 197,832 23.1%
Store pre-opening costs 2,987 0.3% 1,561 0.2%
Interest expense, net of interest
income of $136 and $13, respectively 2,085 0.2% 1,831 0.2%
--------- ------ --------- ------
Income before income tax 57,430 6.2% 52,028 6.1%
Income tax expense 21,249 2.3% 19,250 2.3%
-------- ------ -------- ------
Net income $ 36,181 3.9% $ 32,778 3.8%
======== ====== ======== ======
(1) Percentages may not foot due to rounding.
Basic and diluted earnings per share
data:
Basic earnings per share $ 1.33 $ 1.19
======== ========
Basic weighted average shares
outstanding 27,240 27,491
======== ========
Diluted earnings per share $ 1.22 $ 1.09
======== ========
Diluted weighted average shares
outstanding 29,688 30,072
======== ========
Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(unaudited)
October January
29, 2005 29, 2005
---------- ---------
ASSETS
-------------------------------------------------
Cash and cash equivalents $ 15,570 $ 40,455
Merchandise inventories, net 386,943 281,588
Current deferred taxes 23,549 24,031
Prepaid expenses and other current assets 29,652 22,278
--------- --------
Total current assets 455,714 368,352
Property, equipment and leasehold improvements,
net 238,821 212,179
Goodwill 79,353 79,353
Intangible asset 14,910 14,910
Other non-current assets, net 14,461 12,205
--------- --------
Total assets $ 803,259 $686,999
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------
Accounts payable $ 112,832 $ 74,957
Income taxes payable 2,469 11,024
Current portion of debt obligations 72 130
Accrued expenses and other current liabilities 68,017 57,080
--------- --------
Total current liabilities 183,390 143,191
Debt obligations 76,460 3,048
Deferred taxes 9,912 11,527
Other long-term liabilities 55,779 47,960
--------- --------
Total liabilities 325,541 205,726
--------- --------
Commitments and contingencies
Common stock, par value $0.01, 75,000 shares
authorized, 32,633 and 32,107 shares issued,
respectively 326 321
Additional paid-in capital 405,990 396,229
Less treasury stock - at cost, 6,448 and 4,625
shares, respectively (143,515) (94,828)
Minimum pension liability adjustment (451) (451)
Retained earnings 215,368 180,002
--------- --------
Stockholders' equity 477,718 481,273
--------- --------
Total liabilities and stockholders' equity $ 803,259 $686,999
========= ========
Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Thirty- Thirty-
Nine Nine
Weeks Weeks
Ended Ended
---------- ---------
October October
29, 2005 30, 2004
---------- ---------
Cash flows from operating activities:
Net income $ 36,181 $ 32,778
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 30,043 26,724
Deferred income taxes (1,133) 3,773
Amortization of debt issue costs 335 335
Provision for bad debts - 311
Deferred stock compensation 592 173
Proceeds from sale of proprietary credit card
portfolio, net - 34,764
Construction allowances received from landlords 9,583 2,058
Changes in operating assets and liabilities:
Decrease in accounts receivable and retained
interest in receivables sold - 2,880
Increase in merchandise inventories (105,355) (99,563)
(Increase) decrease in other assets (8,549) 5,323
Increase in accounts payable and other liabilities 38,493 43,101
--------- --------
Total adjustments (35,991) 19,879
--------- --------
Net cash provided by operating activities 190 52,657
--------- --------
Cash flows from investing activities:
Additions to property, equipment and leasehold
improvements (58,492) (32,260)
Proceeds from retirement of fixtures and equipment 391 16
--------- --------
Net cash used in investing activities (58,101) (32,244)
--------- --------
Cash flows from financing activities:
Proceeds from (payments on):
Revolving credit facility, net 73,461 34,210
Finance lease obligations - 1,650
Repurchases of common stock (48,687) (61,701)
Debt obligations (107) (832)
Exercise of stock options 9,174 6,392
Payments of cash dividends (815) -
--------- --------
Net cash provided by (used in) financing
activities 33,026 (20,281)
--------- --------
Net increase (decrease) in cash and cash
equivalents (24,885) 132
Cash and cash equivalents:
Beginning of period 40,455 14,733
--------- --------
End of period $ 15,570 $ 14,865
========= ========
Supplemental disclosures:
Interest paid $ 1,737 $ 1,319
========= ========
Income taxes paid $ 27,499 $ 8,189
========= ========
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