Stage Stores (NASDAQ:STGS)
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Stage Stores, Inc. (Nasdaq:STGS) ("Stage" or the
"Company") today announced that it has entered into a definitive
agreement to acquire privately owned B.C. Moore & Sons, Inc. ("B.C.
Moore") for approximately $37.0 million in cash. The transaction,
which has been approved by the Boards of Directors of Stage and B.C.
Moore, is expected to close within the next thirty days and is subject
to customary closing conditions.
In purchasing B.C. Moore, the Company will acquire 78 retail
locations, located in small markets throughout Alabama, Georgia, North
Carolina and South Carolina. The Company's integration plan calls for
69 of the acquired locations to be converted into Peebles stores, and
the remaining 9 locations will be closed. Existing merchandise
inventories will be liquidated at all stores, and the continuing 69
stores will be remodeled, re-merchandised, and reopened as Peebles
stores. The grand openings of the newly converted Peebles stores will
occur in phases beginning in July through October. In order to allow
it to remain focused on its core business and operations, the Company
expects to engage a third party to manage the acquired stores through
the completion of the inventory liquidation sales process. The Company
noted that it is not acquiring B.C Moore's corporate office, two
distribution centers, or any other real estate. However, these
facilities will be available for the Company to use during the
transition period.
After the acquisition, the Company's aggregate store count in
Alabama, Georgia, North Carolina and South Carolina will increase from
30 stores to 99 stores, as follows:
-0-
*T
Number of Stores
------------------------------------------------
State Existing Acquired Combined
---------------------- --------------- --------------- ---------------
Alabama 10 9 19
Georgia 2 26 28
North Carolina 15 9 24
South Carolina 3 25 28
--------------- --------------- ---------------
4 State Total 30 69 99
*T
Jim Scarborough, Chairman and Chief Executive Officer of Stage,
commented, "We are extremely enthusiastic about this transaction due
to its significant strategic benefits. It expands and strengthens our
position in the Southeast, and it provides us with good real estate
locations in many of our targeted markets in these states. It also
eliminates a potential competitor, and it is consistent with our
corporate strategy of increasing the concentration of our store base
into smaller and more profitable markets."
Mr. Scarborough continued, "The acquired locations represent an
exceptional geographic fit with our existing store base, with only a
two store overlap. Additionally, the locations meet our size and
market demographics criteria, since the typical B.C. Moore store is
located in a market area of less than 50,000 people, is strip shopping
center based, and has an average of approximately 14,300 selling
square feet. We expect to realize operating synergies as these stores
are converted to Peebles stores, incorporated into our existing
distribution system and managed from our South Hill, Virginia
administrative offices."
Mr. Scarborough concluded, "The acquisition of B.C. Moore
represents a logical next step for us following our successful
integration of Peebles. It significantly enhances the strategic and
geographic development of our business, improves our competitive
position, and presents us with a compelling opportunity for increased
sales and earnings. Our small market expertise, coupled with the
investments that we have made in our systems, distribution centers and
infrastructure, gives us confidence in our ability to successfully
convert, integrate, and grow these 69 additional stores."
The Company stated that it expects the converted stores to
contribute sales of approximately $95.0 to $100.0 million in fiscal
2007, which will be their first full fiscal year of operation. The
Company also stated that, due to the magnitude of the conversion
activities that will be taking place following the closing of the
transaction, it has scaled back its original organic store opening
plans for fiscal 2006 of between 40 and 50 new stores, and now
anticipates opening between 30 and 35 new stores during the fiscal
year. When these organic store openings are combined with the acquired
and converted B.C Moore stores, the Company will be opening a total of
approximately 100 new stores during the fiscal year.
Lehman Brothers Inc. acted as exclusive financial advisor to Stage
on this transaction.
Conference Call Information
The Company will host a conference call at 8:30 a.m. Eastern Time
on Tuesday, February 21, 2006 to further discuss the items contained
in this news release. Interested parties can participate in the
Company's conference call by dialing 703-639-1122. 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, March 3, 2006.
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 550 stores located in
31 states. The Company operates under the Stage, Bealls and Palais
Royal names throughout the South Central states, and under the Peebles
name throughout the Midwestern, Southeastern, Mid-Atlantic and New
England 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 anticipated benefits, as well as the
plan of integration and conversion, of the acquired B.C. Moore
locations, comments regarding the anticipated impact on sales from the
acquisition in the 2007 fiscal year and comments regarding the number
of stores to be opened in the 2006 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.