Stage Stores Reports Second Quarter Results and Updates Guidance
Aug. 23, 2018
HOUSTON--(BUSINESS WIRE)--Aug 23, 2018--Stage Stores, Inc. (NYSE:SSI) today reported results for the second quarter ended August 4, 2018, and updated guidance for fiscal year 2018. For the second quarter, comparable sales decreased 0.2%. Loss before income tax was $16.8 million compared to a loss before income tax of $9.6 million in the second quarter 2017, driven by investments in the growth of the off-price business, additional supply chain costs, and increased promotional markdowns.
“Our comparable sales results for the second quarter reflected a sequential improvement of 260 basis points versus the first quarter,” commented Michael Glazer, President and Chief Executive Officer. “While our department store business was challenged in the middle of the quarter, we saw comparable sales increase in late July. Gordmans comparable sales increased 11% during the second quarter, and we are particularly encouraged by the momentum created by our back-to-school business that began late in the quarter. We continue to be pleased with inventory content and levels, with department store inventory lower than last year, and normalized inventory in Gordmans.”
Mr. Glazer continued, “Looking ahead, many of our underlying first half trends provide optimism for the back half of the year, including our growing off-price business, trending non-apparel categories which will make great holiday gifts, and strong momentum in our e-commerce business which is the most highly penetrated in the fourth quarter. As a result, we anticipate 2018 EBITDA will increase 40% versus 2017 at the middle of our updated guidance range. In addition, we are pleased to have ended the second quarter with $95 million in excess availability, including the impact of our recent credit facility amendment, which illustrates the strong relationship we have with our bank partners.”
The company also announced that its Board of Directors declared a quarterly cash dividend of $0.05 per share on its common stock, payable on September 19, 2018 to shareholders of record at the close of business on September 4, 2018.
Second Quarter Results
Second quarter 2018 results compared to second quarter 2017 results were as follows:Net sales were $369 million compared to $377 million Comparable sales decreased 0.2% for the total company, decreased 2.2% for department stores, and increased 11.4% for Gordmans off-price stores Net loss was $16.9 million compared to a net loss of $6.3 million Loss per share was $0.60 compared to a loss per share of $0.23 EBIT was $(14.1) million compared to $(7.7) million
For fiscal 2018, the company reaffirmed the following guidance:Net sales between $1,610 million and $1,640 million Comparable sales of flat to an increase of 2.0% Depreciation and amortization between $55 million and $60 million Capital expenditures of $30 million to $35 million
For fiscal 2018, the company updated the following guidance:Net loss of between $41 million and $34 million Tax rate of 0%, which, when compared to 2017, is expected to negatively impact 2018 EPS by $0.30 to $0.35 per diluted share, or net loss by $8 million to $10 million Loss per diluted share between $1.45 and $1.20 EBIT between $(29) million and $(22) million EBITDA between $26 million and $38 million Opening one new Gordmans off-price store, converting nine department stores to Gordmans off-price stores, and closing 30 to 40 department stores
During the first quarter of 2018, the company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). As a result of the adoption, the condensed consolidated statements of operations reflect the reclassification of credit income related to the company’s private label credit card program from selling, general and administrative expenses to revenue. The condensed consolidated balance sheets and condensed consolidated statements of cash flows reflect the reclassification of the asset for the right to recover sales return merchandise from merchandise inventories to prepaid expenses and other current assets. The company adopted the standard using the full retrospective method, and the condensed consolidated statements of operations, balance sheets and cash flows for the prior year periods have been restated.
Conference Call / Webcast Information
The company will post a pre-recorded conference call today at 8:30 a.m. Eastern Time to discuss its results and guidance. Interested parties may access the company’s call by dialing 866-393-5631 and providing conference ID 7298454. Alternatively, interested parties may listen to an audio webcast of the call through the Investor Relations section of the company’s website ( corporate.stage.com ) under the “Webcasts” caption. A replay of the call will be available online through September 27, 2018.
About Stage Stores
Stage Stores, Inc. is a leading retailer of trend-right, name-brand values for apparel, accessories, cosmetics, footwear and home goods. As of August 23, 2018, the company operates in 42 states through 764 BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores and 63 GORDMANS off-price stores, as well as an e-commerce website at www.stage.com. For more information about Stage Stores, visit the company’s website at corporate.stage.com.
Use of Non-GAAP / Adjusted Financial Measures
The company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures help to facilitate comparisons of company operating performance across periods. This release includes earnings (loss) before interest and taxes (“EBIT”) and earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), which are non-GAAP financial measures. A reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures is provided in a table included with this release.
Caution Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly, descriptions of the company’s objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are based upon management’s then-current views and assumptions regarding future events and operating performance. Although management believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of its knowledge, forward-looking statements involve risks, uncertainties and other factors which may materially affect the company’s business, financial condition, results of operations or liquidity.
Forward-looking statements are not guarantees of future performance and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, economic conditions, cost and availability of goods, inability to successfully execute strategic initiatives, competitive pressures, economic pressures on the company and its customers, freight costs, the risks discussed in the Risk Factors section of the company’s most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”), and other factors discussed from time to time in the company’s other SEC filings. This release should be read in conjunction with such filings, and you should consider all of such risks, uncertainties and other factors carefully in evaluating forward-looking statements.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the company makes on related subjects in its public announcements and SEC filings.
(Tables to follow)
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