Stage Stores, Inc. (Nasdaq:STGS): -- Fourth Quarter Net Income
Increases To $0.68 Per Diluted Share -- Full Year Net Income
Increases To $1.90 Per Diluted Share Stage Stores, Inc.
(Nasdaq:STGS) today reported its financial results for the fourth
quarter and fiscal year ended January 28, 2006. The Company
reported that its total sales for the fourth quarter increased 7.6%
to $418.6 million compared to $389.0 million last year, and its
comparable store sales increased 5.6% versus an increase of 4.0%
last year. Net income for the fourth quarter was $19.7 million, or
$0.68 per diluted share, as compared to net income of $18.6
million, or $0.62 per diluted share, in the prior year period.
Commenting on fourth quarter results, Jim Scarborough, Chairman and
Chief Executive Officer, stated, "Solid customer demand for our
merchandise assortments during the holiday shopping period, coupled
with strong comparable store sales gains in Louisiana and
Mississippi, where those impacted by hurricanes Katrina and Rita
continued to replenish their wardrobes, contributed to our 5.6%
comparable store sales gain for the fourth quarter. Our higher
sales and lower diluted share count versus last year contributed to
a 9.7% increase in our diluted earnings per share, advancing to
$0.68 from $0.62 in the prior year period." For the 2005 fiscal
year, total sales increased 8.1% to $1,344.1 million from $1,243.9
million in fiscal 2004, and comparable store sales increased 5.4%
versus an increase of 2.5% last year. Net income for the 2005
fiscal year was $55.9 million, or $1.90 per diluted share, as
compared to net income of $51.4 million, or $1.72 per diluted
share, for the prior year. Commenting on the full year results, Mr.
Scarborough stated, "Despite the enormous challenges that were
thrown at us by Mother Nature, all in all, 2005 was a very
successful year. We posted record sales, and achieved double-digit
diluted earnings per share growth. In addition, most of our major
merchandise categories achieved comparable store sales gains. In
particular, our women's special sizes areas experienced exceptional
growth, posting a 14.8% comparable store sales increase, and our
accessories departments followed closely, with a strong 12.9%
increase. Additionally, each of our small, mid-size and large
market store groups posted positive comparable store sales results
for the year." Mr. Scarborough further stated, "We moved a step
closer in narrowing the sales per square foot gap between our Stage
and Peebles Divisions. In fact, we exceeded our goal of improving
the sales productivity at our Peebles Division, as their full year
sales increased by $6 per weighted average selling square foot over
last year's level. We also increased the potential productivity and
processing capacity of our South Hill, Virginia distribution center
through the addition of new sortation equipment, and a new
warehouse management system. As a result, we were able to close our
Knoxville, Tennessee distribution center and consolidate their
operations into our South Hill facility. We had a very successful
introductory two-store launch of Clinique, by Estee Lauder in our
Stage Division, and we will be increasing our door count with them
during 2006. With regard to store growth, during the year, we
opened 36 new stores and entered 2 new states. Unfortunately, we
had to close 4 stores due to damage that they sustained during
hurricanes Katrina and Rita, but we currently plan to reopen 3 of
these affected stores shortly, with 1 reopening in March, 1 in
April and 1 in May. Lastly, we completed a three-for-two stock
split, initiated a quarterly cash dividend of 2.5 cents per share,
and spent $48.7 million buying back 1.8 million shares of our
common stock." Mr. Scarborough continued, "While we clearly had an
impressive list of accomplishments and milestones in 2005, we could
not have accomplished so much without the help of our 13,000 valued
Stage associates. They performed with diligence and dedication
throughout the year, and our accomplishments are a result of their
outstanding levels of customer service and caring." Mr. Scarborough
concluded, "As we enter 2006, we have already made some important
strides. We acquired B.C. Moore & Sons on February 27th, and we
currently plan to convert 69 of the 78 acquired locations into
Peebles stores. In addition, we plan to open 35 organic new stores,
reopen a store that we lost our lease on last year, and reopen 3 of
our hurricane-damaged stores, for a total of 108 new stores this
year, which is a significant growth milestone for our company.
We've further strengthened our management team with the addition of
Andy Hall, former Chairman of Foley's, as our President and Chief
Operating Officer. We also promoted two of our senior executives to
key roles within our Stage and Peebles Divisions. Lastly, we
announced that we will be moving to the New York Stock Exchange on
March 16th and will trade under the symbol "SSI". Our plates will
be full in 2006, but as always, we remain intensely focused on
providing our customers with an exceptional shopping experience,
and to producing the best possible returns for our shareholders."
Fiscal 2006 -- First Quarter and Full Year Outlook 1st Quarter
2006: The Company provided the following guidance for the first
quarter ending April 29, 2006: -0- *T 1Q 2006 OUTLOOK 1Q 2005
ACTUAL ------------------------ -------------------- Sales ($mm)
$315.0 - $321.0 $310.1 Net Income ($mm) $19.2 - $20.2 $20.5 Diluted
EPS $0.66 - $0.69 $0.68 Diluted Shares (m) 29,200 29,973 *T In
issuing its first quarter 2006 guidance, the Company provided the
following additional information: -- Comparable store sales
assumption -- low single digits -- Assumed impact of stock option
expensing and the increase in expense associated with other
long-term incentive equity awards -- $0.02 per share -- The outlook
does not yet include the projected impact from the acquired B.C.
Moore stores. The Company expects to update guidance along with the
March sales release, which is scheduled for April 6th, to include
the effects of this transaction. FY 2006: The Company provided the
following guidance for the 2006 fiscal year ending February 3,
2007: -0- *T FY 2006 OUTLOOK FY 2005 ACTUAL
------------------------ -------------------- Sales ($mm) $1,407.0
- $1,435.0 $1,344.1 Net Income ($mm) $58.0 - $61.5 $55.9 Diluted
EPS $2.00 - $2.12 $1.90 Diluted Shares (m) 29,000 29,370 *T In
issuing its fiscal 2006 guidance, the Company provided the
following additional information: -- Comparable store sales
assumption -- low single digits -- Assumed impact of stock option
expensing and the increase in expense associated with other
long-term incentive equity awards -- $0.08 per share -- The outlook
does not yet include the projected impact from the acquired B.C.
Moore stores. The Company expects to update guidance along with the
March sales release, which is scheduled for April 6th, to include
the effects of this transaction. -- Fiscal 2006 will have an extra
week (53rd week). The expected impact of the 53rd week is an
increase in sales in the 4th quarter and full fiscal year of from
$16.5 - $17.5 million, while the expected impact of the 53rd week
on net earnings for the 4th quarter and full year is nil, as
operating results for that week are expected to be at an
approximate break-even level. Conference Call Information The
Company will host a conference call today at 8:30 a.m. Eastern Time
to discuss the fourth quarter results. Interested parties can
participate in the Company's conference call by dialing
703-639-1316. 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 17, 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. The Company currently operates 194 Bealls, 48 Palais
Royal and 134 Stage stores throughout the South Central states, and
operates 174 Peebles stores throughout the Midwestern,
Southeastern, Mid-Atlantic and New England states. On February 27,
2006, the Company purchased B.C. Moore & Sons, Inc., and
acquired 78 retail locations. The Company currently plans to
convert 69 of the acquired stores to its Peebles name and format,
in phases, beginning in mid July. 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 first quarter of the 2006 fiscal
year and for the full 2006 fiscal year, comments regarding the
Company's store opening plans for the 2006 fiscal year, and
comments regarding the number of acquired B.C. Moore stores to be
converted into Peebles stores. 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 Report 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) -0- *T Stage Stores, Inc.
Condensed Consolidated Statements of Income (in thousands, except
earnings per share) (unaudited) Thirteen Weeks Ended
---------------------------------- January 28, 2006 January 29,
2005 ---------------- ----------------- Amount % to Amount % to
Sales Sales (1) --------- ------ --------- ------- Net sales
$418,566 100.0% $389,025 100.0% Cost of sales and related buying,
occupancy and distribution expenses 304,792 72.8% 282,717 72.7%
-------- ------ -------- ------- Gross profit 113,774 27.2% 106,308
27.3% Selling, general and administrative expenses 81,399 19.4%
76,433 19.6% Store opening costs 223 0.1% 611 0.2% Interest
expense, net of interest income of $8 and $0, respectively 873 0.2%
684 0.2% -------- ------ -------- ------- Income before income tax
31,279 7.5% 28,580 7.3% Income tax expense 11,573 2.8% 9,970 2.6%
-------- ------ -------- ------- Net income $ 19,706 4.7% $ 18,610
4.8% ======== ====== ======== ======= (1) Percentages may not foot
due to rounding. Basic and diluted earnings per share data: Basic
earnings per share $ 0.74 $ 0.68 ======== ======== Basic weighted
average shares outstanding 26,462 27,223 ======== ======== Diluted
earnings per share $ 0.68 $ 0.62 ======== ======== Diluted weighted
average shares outstanding 28,936 29,793 ======== ======== Stage
Stores, Inc. Condensed Consolidated Statements of Income (in
thousands, except earnings per share) (unaudited) Fifty-two Weeks
Ended -------------------------------------- January 28, 2006
January 29, 2005 ------------------ ------------------- Amount % to
Amount % to Sales Sales (1) ----------- ------ ----------- -------
Net sales $1,344,100 100.0% $1,243,851 100.0% Cost of sales and
related buying, occupancy and distribution expenses 952,680 70.9%
884,291 71.1% ---------- ------ ---------- ------- Gross profit
391,420 29.1% 359,560 28.9% Selling, general and administrative
expenses 296,543 22.1% 274,265 22.0% Store opening costs 3,210 0.2%
2,172 0.2% Interest expense, net of interest income of $226 and
$87, respectively 2,958 0.2% 2,515 0.2% ---------- ------
---------- ------- Income before income tax 88,709 6.6% 80,608 6.5%
Income tax expense 32,822 2.4% 29,220 2.3% ---------- ------
---------- ------- Net income $ 55,887 4.2% $ 51,388 4.1%
========== ====== ========== ======= (1) Percentages may not foot
due to rounding. Basic and diluted earnings per share data: Basic
earnings per share $ 2.07 $ 1.87 ========== ========== Basic
weighted average shares outstanding 27,046 27,423 ==========
========== Diluted earnings per share $ 1.90 $ 1.72 ==========
========== Diluted weighted average shares outstanding 29,370
29,838 ========== ========== Stage Stores, Inc. Condensed
Consolidated Balance Sheets (in thousands, except par values)
(unaudited) January 28, January 29, 2006 2005 -----------
------------ ASSETS ---------------------------------------------
Cash and cash equivalents $ 33,683 $ 40,455 Merchandise
inventories, net 283,665 281,588 Current deferred taxes 24,270
24,031 Prepaid expenses and other current assets 36,076 22,278
--------- --------- Total current assets 377,694 368,352 Property,
equipment and leasehold improvements, net 244,091 212,179 Goodwill
79,353 79,353 Intangible asset 14,910 14,910 Other non-current
assets, net 15,605 12,205 --------- --------- Total assets $
731,653 $ 686,999 ========= ========= LIABILITIES AND STOCKHOLDERS'
EQUITY --------------------------------------------- Accounts
payable $ 81,719 $ 74,957 Income taxes payable 8,968 11,024 Current
portion of debt obligations 74 130 Accrued expenses and other
current liabilities 64,423 57,080 --------- --------- Total current
liabilities 155,184 143,191 Debt obligations 2,979 3,048 Deferred
taxes 9,860 11,527 Other long-term liabilities 61,798 47,960
--------- --------- Total liabilities 229,821 205,726 ---------
--------- Commitments and contingencies Common stock, par value
$0.01, 50,000 shares authorized, 33,033 and 32,107 shares issued,
respectively 330 321 Additional paid-in capital 412,456 396,229
Less treasury stock - at cost, 6,448 and 4,625 shares, respectively
(143,515) (94,828) Minimum pension liability adjustment (1,981)
(451) Retained earnings 234,542 180,002 --------- ---------
Stockholders' equity 501,832 481,273 --------- --------- Total
liabilities and stockholders' equity $ 731,653 $ 686,999 =========
========= Stage Stores, Inc. Condensed Consolidated Statements of
Cash Flows (in thousands) (unaudited) Fifty-Two Fifty-Two Weeks
Ended Weeks Ended ------------ ------------- January 28, January
28, 2006 2005 ------------ ------------- Cash flows from operating
activities: Net income $ 55,887 $ 51,388 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 41,519 36,638 Deferred income taxes
(1,006) 4,710 Stock option income tax benefits 4,968 7,593
Amortization of debt issue costs 447 446 Provision for bad debts -
311 Deferred stock compensation 738 272 Proceeds from sale of
proprietary credit card portfolio, net - 34,764 Construction
allowances received from landlords 13,302 3,104 Changes in
operating assets and liabilities: Decrease in accounts receivable
and retained interest in receivables sold - 2,880 Increase in
merchandise inventories (2,077) (21,901) (Increase) decrease in
other assets (17,926) 1,679 Increase in accounts payable and other
liabilities 10,155 10,510 -------- --------- Total adjustments
50,120 81,006 -------- --------- Net cash provided by operating
activities 106,007 132,394 -------- --------- Cash flows from
investing activities: Additions to property, equipment and
leasehold improvements (75,168) (47,890) Proceeds from retirements
of property, equipment and leasehold improvements 2,018 16 --------
--------- Net cash used in investing activities (73,150) (47,874)
-------- --------- Cash flows from financing activities: Proceeds
from (payments on): Revolving credit facility, net - (10,700)
Finance lease obligations - 1,650 Repurchases of common stock
(48,687) (61,701) Debt obligations (125) (891) Exercise of stock
options and warrants 10,530 12,844 Payments of cash dividends
(1,347) - -------- --------- Net cash used in financing activities
(39,629) (58,798) -------- --------- Net increase (decrease) in
cash and cash equivalents (6,772) 25,722 Cash and cash equivalents:
Beginning of period 40,455 14,733 -------- --------- End of period
$ 33,683 $ 40,455 ======== ========= Supplemental disclosures:
Interest paid $ 2,666 $ 1,870 ======== ========= Income taxes paid
$ 30,917 $ 8,513 ======== ========= *T
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