FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 3, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-21011
STAGE STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0407711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10201 MAIN STREET, HOUSTON, TEXAS 77025
(Address of principal executive offices) (Zip Code)
(713) 667-5601
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
The number of shares of common stock outstanding as of June 6, 1997 was
22,121,964 shares of Common Stock and 1,250,584 shares of Class B Common Stock.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Stage Stores, Inc.
Consolidated Condensed Balance Sheet
(in thousands, except par value)
<TABLE>
<CAPTION>
May 3, 1997 February 1, 1997
----------- ----------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents .............................. $ 10,017 $ 18,286
Undivided interest in accounts receivable trust ........ 65,382 80,672
Merchandise inventories ................................ 222,762 187,717
Prepaid expenses ....................................... 19,783 15,690
Other current assets ................................... 18,457 32,797
--------- ---------
Total current assets ............................. 336,401 335,162
Property, equipment and leasehold improvements, net .... 116,687 111,189
Goodwill, net .......................................... 47,016 47,173
Other assets ........................................... 15,089 15,759
--------- ---------
$ 515,193 $ 509,283
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable ....................................... $ 57,620 $ 54,336
Accrued interest ....................................... 7,881 12,908
Accrued expenses and other current liabilities ......... 32,850 32,699
--------- ---------
Total current liabilities ........................ 98,351 99,943
Long-term debt ......................................... 298,599 298,453
Other long-term liabilities ............................ 18,859 18,621
--------- ---------
Total liabilities ................................ 415,809 417,017
--------- ---------
Preferred stock, par value $1.00, non-voting,
3 shares authorized, no shares
issued or outstanding ............................ --
Common stock, par value $0.01, 75,000 shares
authorized, 22,048 and 22,033 shares
issued and outstanding, respectively ............. 220 220
Class B common stock, par value $0.01, non-voting,
3,000 shares authorized, 1,251
issued and outstanding ........................... 13 13
Additional paid-in capital ............................. 169,835 169,811
Accumulated deficit .................................... (70,684) (77,778)
--------- ---------
Stockholders' equity ............................. 99,384 92,266
--------- ---------
Commitments and contingencies .......................... --
--------- ---------
$ 515,193 $ 509,283
========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
1
<PAGE>
Stage Stores, Inc.
Consolidated Condensed Statement of Income
(in thousands, except earnings per share)
(unaudited)
Three Months Ended
May 3, 1997 May 4, 1996
----------- -----------
Net sales ........................... $191,512 $163,177
Cost of sales and related buying,
occupancy and distribution expenses 129,587 111,096
-------- --------
Gross profit ........................ 61,925 52,081
Selling, general and
administrative expenses ........... 41,258 35,965
Store opening and closure costs ..... 143 71
-------- --------
Operating income .................... 20,524 16,045
Interest, net ....................... 8,942 11,588
-------- --------
Income before income tax ............ 11,582 4,457
Income tax expense .................. 4,488 1,805
-------- --------
Net income .......................... $ 7,094 $ 2,652
======== ========
Earnings per common share data:
Earnings per common share ........... $ 0.30 $ 0.21
======== ========
Weighted average common shares
outstanding ....................... 23,904 12,861
======== ========
The accompanying notes are an integral part of this statement.
2
<PAGE>
Stage Stores, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 3, 1997 May 4, 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income .......................................................... $ 7,094 $ 2,652
-------- --------
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ..................................... 3,620 3,149
Deferred income taxes ............................................. 487 (958)
Accretion of discount ............................................. 146 3,768
Amortization of debt issue costs .................................. 530 469
Changes in working capital ........................................ (10,990) (12,295)
-------- --------
Total adjustments ............................................. (6,207) (5,867)
-------- --------
Net cash provided by (used in) operating activities ............. 887 (3,215)
-------- --------
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements ......... (9,097) (6,449)
-------- --------
Net cash used in investing activities ........................... (9,097) (6,449)
-------- --------
Cash flows from financing activities:
Proceeds from common stock .......................................... 20 34
Payments on long-term debt .......................................... -- (125)
Redemption of common stock .......................................... -- (14)
Additions to debt issue costs ....................................... (79) (92)
-------- --------
Net cash used in financing activities ........................... (59) (197)
-------- --------
Net decrease in cash and cash equivalents ........................... (8,269) (9,861)
Cash and cash equivalents:
Beginning of period ............................................... 18,286 20,273
-------- --------
End of period ..................................................... $ 10,017 $ 10,412
======== ========
Supplemental disclosure of cash flow information:
Interest paid ....................................................... $ 13,247 $ 13,207
======== ========
Income taxes paid ................................................... $ 2 $ 5,883
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
Stage Stores, Inc.
Consolidated Condensed Statement of Stockholders' Equity
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Common Stock
----------------------------------------
Class B Additional
Shares Shares Paid-in Accumulated
Outstanding Amount Outstanding Amount Capital Deficit Total
----------- ------ ----------- ------ ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1997 ....... 22,033 $220 1,251 $13 $169,811 $(77,778) $92,266
Net income ...................... -- -- -- -- -- 7,094 7,094
Vested compensatory stock options -- -- -- -- 4 -- 4
Exercise of stock options ....... 15 -- -- -- 20 -- 20
-------- ------ -------- ------ -------- -------- -------
Balance, May 3, 1997 ............ 22,048 $220 1,251 $13 $169,835 $(70,684) $99,384
======== ====== ======== ====== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
STAGE STORES, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated condensed financial statements
of Stage Stores, Inc. (the "Company" or "Stage Stores"), have been prepared in
accordance with Rule 10-01 of Regulation S-X and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Those adjustments, which include only normal
recurring adjustments, that are, in the opinion of management, necessary for a
fair presentation of the results of the interim periods have been made. The
results of operations for such interim periods are not necessarily indicative of
results of operations for a full year. The unaudited consolidated condensed
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended February 1, 1997,
filed with Stage Stores, Inc.'s Annual Report on Form 10-K/A. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation. References to a particular year are to the Company's
fiscal year which is the 52 or 53 week period ending on the Saturday closest to
January 31 of the following calendar year (e.g., a reference to "1997" is a
reference to the fiscal year ended January 31, 1998).
The Company, through its wholly-owned subsidiary, Specialty Retailers,
Inc. ("SRI"), operates family apparel stores primarily under the names "Bealls",
"Palais Royal" and "Stage" offering branded fashion apparel and accessories for
women, men and children. As of May 3, 1997, the Company operated 327 stores in
20 states located throughout the central United States.
2. Pursuant to the accounts receivable securitization program (the
"Accounts Receivable Program"), the Company transfers all of the accounts
receivable generated by the holders of the Company's private label credit card
accounts to a wholly-owned special purpose entity, SRI Receivables Purchase Co.,
Inc. ("SRPC"). SRPC, in turn, transfers the accounts receivable to a
securitization vehicle, a special purpose trust (the "Trust"), in exchange for
cash or an increase in a retained interest in the Trust which is represented by
two certificates of beneficial ownership (the "Retained Certificates"). SRPC is
operated in a fashion intended to ensure that its assets and liabilities are
distinct from those of the Company and its other affiliates as SRPC's creditors
have a claim on its assets prior to becoming available to any creditor of the
Company.
3. During October 1996, the Company completed an initial public offering
(the "Offering") of its common stock. The Company sold 10,750,000 shares at an
initial offering price of $16.50 per share. The net proceeds from the Offering
were approximately $165.7 million after deducting underwriting discounts and
expenses related to the transaction. The net proceeds were used primarily to
retire the 12 3/4% Senior Discount Debentures due 2000 (the "Senior Discount
Debentures"). The remaining proceeds of approximately $26.5 million were used
for general corporate purposes.
Immediately prior to the Offering, the Board of Directors approved a
.94727 for 1 reverse stock split, the effect of which is reflected in the
accompanying financial statements for all periods presented.
4. On March 5, 1997, the Company reached a definitive agreement to acquire
C.R. Anthony Company ("CR Anthony"), a retailer of branded and private label
apparel for the entire family which operated 238 stores in 16 southwestern and
Rocky Mountain states as of May 3, 1997. The transaction is subject to approval
by the shareholders of CR Anthony and other closing conditions. In addition, the
agreement contains provisions relating to the obligations of the parties in the
event of termination of the agreement. It is expected that the transaction will
be completed by mid-year 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
5. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128"). SFAS 128, which is effective for periods ending after December 15, 1997,
specifies the computation, presentation and disclosure requirements of earnings
per share ("EPS") and supersedes Accounting Principles Board Opinion No. 15
("APB 15"). SFAS 128 requires a dual presentation of basic and diluted EPS.
Basic EPS, which excludes the impact of common stock equivalents, replaces
primary EPS. Diluted EPS, which utilizes the average market price per share as
opposed to the greater of the average market price per share
5
<PAGE>
or ending market price per share when applying the treasury stock method in
determining common stock equivalents, replaces fully diluted EPS. Basic and
diluted EPS for all historical periods presented, calculated assuming SFAS 128
was effective at the beginning of such historical period, would not be
materially different than the presentations using APB 15.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
Certain items discussed or incorporated by reference herein contain
forward-looking statements that involve risks and uncertainties including, but
not limited to, the seasonality of demand for apparel which can be affected by
weather patterns, levels of competition, competitors' marketing strategies,
changes in fashion trends and availability of product, the failure to achieve
the expected results of merchandising and marketing plans or store opening or
closing plans. The occurrence of any of the above could have a material adverse
impact on the Company's operating results. Certain information herein contains
estimates which represent management's best judgment as to the date hereof based
on information currently available; however, the Company does not intend to
update this information to reflect developments or information obtained after
the date hereof and disclaims any legal obligation to the contrary.
GENERAL
OVERVIEW. The Company operates the store of choice for well known national
brand name family apparel in over 200 small towns and communities across the
central United States. The Company has recognized the high level of brand
awareness and demand for fashionable, quality apparel by consumers in small
markets and has identified these markets as a profitable and underserved niche.
The Company has developed a unique franchise focused on these small markets,
differentiating itself from the competition by offering a broad range of brand
name merchandise with a high level of customer service in convenient locations.
The financial information, discussion and analysis that follow should be
read in conjunction with the Company's Consolidated Financial Statements
included in the Company's 1996 Annual Report on Form 10-K/A.
RESULTS OF OPERATIONS
Sales for the first quarter of 1997 increased 17.3% to $191.5 million from
$163.2 million in the same period in 1996. The increase in first quarter sales
was primarily due to $24.1 million in incremental sales from stores opened
during 1997 and 1996 combined with a 5.0% increase in comparable store sales.
The increase in comparable store sales was the result of the strength in the
performance of the Company's small market stores.
Gross profit increased 18.8% to $61.9 million for the first quarter of
1997 from $52.1 million in the same period in 1996. Gross profit margin for the
first quarter of 1997 increased to 32.3% compared to 31.9% for the same period
in 1996. Gross profit margin was favorably impacted by an increase in markup on
merchandise sold due to an improved mix of inventories coupled with additional
leverage of the fixed cost component of gross margin.
Selling, general and administrative expenses for the first quarter of 1997
increased 14.7% to $41.3 million from $36.0 million for the same period in 1996.
As a percentage of sales, these expenses decreased to 21.5% for the first
quarter of 1997 from 22.0% in the same period of 1996 due to the effective
leveraging of the Company's central overhead function as well as an improvement
in store variable expenses.
Operating income for the first quarter of 1997 increased 28.1% to $20.5
million from $16.0 million for the first quarter of 1996 due to the factors
discussed above. Operating income as a percent of sales was 10.7% for the first
quarter of 1997 as compared to 9.8% for the same period in 1996.
Net interest expense for the first quarter of 1997 decreased 23.3% to $8.9
million from $11.6 million for the same period in 1996. This decrease reflects
the retirement of the Senior Discount Debentures which were retired in
connection with the Offering. Excluding this interest from 1996, net interest
expense would have increased $0.9 million due to the issuance of SRPC 12.5%
Trust Certificate-Backed Notes ( the "SRPC Notes") during May 1996.
7
<PAGE>
As a result of the foregoing, net income for the first quarter of 1997
increased by 163.0% to $7.1 million from $2.7 million for the same period in
1996.
SEASONALITY AND INFLATION
The Company's business is seasonal and sales and profits traditionally are
lower during the first nine months of the year (February through October) and
higher during the last three months of the year (November through January).
Working capital requirements fluctuate during the year and generally reach their
highest levels during the third and fourth quarters.
1997 1996
-------- ----------------------------------------------
Q1 Q1 Q2 Q3 Q4
-------- -------- -------- --------- --------
(dollars in thousands)
Net sales .......... $191,512 $163,177 $182,750 $ 182,562 $248,061
Gross profit ....... 61,925 52,081 56,623 56,208 79,075
Operating income ... 20,524 16,045 13,925 12,342 26,258
Quarters' operating
income as a
percent of annual -- 24% 20% 18% 38%
Income (loss) before
extraordinary item $ 7,094 $ 2,652 $ 868 $ (265) $ 10,767
The Company does not believe that inflation had a material effect on its
results of operations during the first quarter of 1997. However, there can be no
assurance that the Company's business will not be affected by inflation in the
future.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital of $238.0 million at May 3, 1997 remained
essentially unchanged from February 1, 1997, although the components of working
capital including cash, inventory, accounts receivable and other current assets
varied. Merchandise inventories increased and cash decreased primarily due to
the seasonal build in inventories and the opening of 13 stores during the first
quarter of 1997. Accounts receivable increased $35.0 million during the first
quarter of 1997 as a result of the seasonal increase in accounts receivable
generated during the Christmas season. Other current assets decreased primarily
due to the collection of a federal tax refund during the first quarter of 1997.
The Company's primary capital requirements are for working capital, debt
service and capital expenditures. Based upon the current capital structure,
management anticipates cash interest payments to be approximately $35.0 million
during each of 1997 and 1998. Capital expenditures are generally for new store
openings, remodeling of existing stores and facilities and customary store
maintenance. Capital expenditures for the first quarter of 1997 were $9.1
million as compared to $6.4 million for the same period of 1996. Management
expects capital expenditures (excluding any capital expenditures resulting from
the potential acquisition of CR Anthony) to be approximately $35.0 million
during 1997, consisting primarily of 55 new store openings and remodeling of
existing stores. Required aggregate principal payments on existing debt total
$2.6 million for each of 1997 and 1998.
The Company's current short-term liquidity needs are provided by (i)
existing cash balances, (ii) operating cash flows, (iii) the Accounts Receivable
Program and (iv) the Company's working capital facility. The Company expects to
fund its long-term liquidity needs from its operating cash flows, the issuance
of debt and/or equity securities, the securitization of its accounts receivable
and bank borrowings.
The Company securitizes all of its trade accounts receivables through
SRPC. SRPC holds a retained
8
<PAGE>
interest in the Trust which is represented by the Retained Certificates. The
Company transfers, on a daily basis, all of the accounts receivable generated
from purchases by the holders of the Company's proprietary credit card to SRPC.
SRPC is operated in a manner intended to ensure that its assets and liabilities
are distinct from those of the Company and its other affiliates as SRPC's
creditors have a claim on its assets prior to such assets becoming available to
any creditor of the Company. SRPC, in turn, transfers on a daily basis, the
accounts receivable purchased from the Company to the Trust in exchange for cash
or an increase in the Retained Certificates. The remaining interest in the Trust
is held by third-party investors which are represented by the Trust Certificates
(as defined below). The Retained Certificates are effectively subordinated to
the interests of such third-party investors, and are pledged to secure the SRPC
Notes which were issued to finance the Uhlmans acquisition.
Since its inception, the Trust has issued $165.0 million of term
certificates and a $40.0 million revolving certificate (collectively, the "Trust
Certificates") to third parties representing undivided interests in the Trust.
The holder of the revolving certificate agreed to purchase interests in the
Trust equal to the amount of accounts receivable in the Trust above the level
required to support the term certificates (aggregating $200.1 million at May 3,
1997), up to a maximum of $40.0 million. As of May 3, 1997, there was no
outstanding balance under the revolving certificate. The Retained Certificates
are effectively subordinated to the interests of third-party investors, and are
pledged to secure the SRPC Notes. If the amount of accounts receivable in the
Trust falls below the level required to support the Trust Certificates, certain
principal collections may be retained in the Trust until such time as the
accounts receivable balances exceed the amount of accounts receivable required
to support the Trust Certificates and any required transferor's interest. SRPC
receives distributions from the Trust of cash in excess of amounts required to
satisfy the Trust's obligations to third-party investors on the Trust
Certificates. Cash so received by SRPC may be used to purchase additional
accounts receivable from, or make distributions to, the Company after SRPC has
satisfied its obligations on the SRPC Notes. The Trust may issue additional
series of certificates from time to time on various terms. Terms of any future
series will be determined at the time of issuance.
In order to take advantage of the current market conditions to put in
place a more flexible capital structure as the Company continues to execute its
growth strategy, the Company has commenced the Refinancing of its debt. As part
of the Refinancing, the Company intends to issue $200.0 million of senior notes
and $100.0 million of senior subordinated notes; the proceeds of which will be
used to tender for all of the Company's outstanding 10% Senior Notes and 11%
Senior Subordinated Notes as well as to refinance the existing debt of CR
Anthony upon completion of the acquisition. In addition, the Company intends to
enter into the New Credit Agreement with up to $200.0 million in borrowing
capacity to replace the current $75.0 million facility.
On March 5, 1997, the Company reached a definitive agreement to acquire CR
Anthony, a retailer of branded and private label apparel for the entire family.
As of May 3, 1997 CR Anthony operated 238 stores in 16 southwestern and Rocky
Mountain states. Under the terms of the agreement, the Company will acquire the
common stock of CR Anthony for a value of $8.00 per share plus $0.01 per share
for every $0.05 per share by which the average closing price of the Company's
common stock exceeds $20.00 per share. The Company's average closing price will
be determined based upon ten randomly selected days out of the twenty trading
days ending on the fifth trading day preceding the closing of the transaction.
The form of consideration (stock/cash mix) to be paid by the Company for
CR Anthony's common stock will also be determined using a formula based upon the
average closing price of the Company's stock. The consideration will be 100%
Company common stock so long as the Company's average closing price is $20.00
per share or higher, and such stock percentage will decline in a linear fashion
to 25% of the consideration if the average closing price of Company common stock
is $15.00 per share. As an example, if the Company's average closing price was
$21.00 per share, CR Anthony's common shareholders would receive a value of
$8.20 per share, 100% of which would be paid in Company common stock (0.39
shares of Company common stock to be exchanged for each share of CR Anthony
common stock). At prices below $15.00 per share, the Company has the option to
terminate the agreement, or to close and pay 0.1333 shares of Company common
stock and an amount in cash equal to the difference between $8.00 per share and
the value of 0.1333 share of Company common stock.
The transaction is subject to approval by the shareholders of CR Anthony
and other closing conditions. In addition, the agreement contains provisions
relating to the obligations of the parties in the event of termination of the
9
<PAGE>
agreement. It is expected that the transaction will be completed by mid-year
1997.
The Company has developed a detailed plan to integrate the operations of
CR Anthony over a twelve month period into those of the Company. In connection
with this integration plan, the Company will incur significant capital
expenditures (currently expected to be approximately $28.5 million) and one-time
costs (currently expected to be approximately $18.0 million). The Company
expects to fund these expenditures from operating cash flows and funds expected
to be available under the New Credit Agreement. If such funds are not available
or are not sufficient to fund these expenditures, the Company will have to
obtain sufficient financing from other sources. This acquisition is
significantly larger than any acquisition the Company has previously made and,
while the Company believes that it has sufficient financial resources to
accomplish the integration of CR Anthony, there can be no assurance in this
regard.
10
<PAGE>
STAGE STORES, INC.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Proxies were solicited by Stage Stores, Inc. in connection with its Annual
Meeting of Stockholders held on May 15, 1997 to (i) elect eight Directors for
the ensuing year and until their successors are elected and (ii) elect the
Company's independent auditors for the ensuing year.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
2.1 Agreement and Plan of Merger, dated as of March 5, 1997, between
Stage Stores, Inc. and C.R. Anthony Company (Incorporated by
Reference to Exhibit 2.1 on Form 8-K of Stage Stores, Inc.,
dated March 5, 1997).
10.1 Termination Option Agreement, dated as of March 5, 1997, between
Stage Stores, Inc. and C.R. Anthony Company (Incorporated by
Reference to Exhibit 10.1 on Form 8-K of Stage Stores, Inc.,
dated March 5, 1997).
REPORTS ON FORM 8-K
A Current Report on Form 8-K dated March 5, 1997 was filed under Item 5 to
report that the Company issued a press release to announce the agreement to
acquire the C.R. Anthony Company.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STAGE STORES, INC.
JUNE 6, 1997 /s/ CARL E. TOOKER
(Date) Carl E. Tooker
President, Chairman and
Chief Executive Officer
JUNE 6, 1997 /s/ JAMES A. MARCUM
(Date) James A. Marcum
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE STAGE STORES, INC. CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-3-1997
<CASH> 10,017
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 222,762
<CURRENT-ASSETS> 336,401
<PP&E> 116,687
<DEPRECIATION> 0
<TOTAL-ASSETS> 515,193
<CURRENT-LIABILITIES> 98,351
<BONDS> 298,599
233
0
<COMMON> 0
<OTHER-SE> (70,684)
<TOTAL-LIABILITY-AND-EQUITY> 515,193
<SALES> 191,512
<TOTAL-REVENUES> 191,512
<CGS> 129,587
<TOTAL-COSTS> 41,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,942
<INCOME-PRETAX> 11,582
<INCOME-TAX> 4,488
<INCOME-CONTINUING> 7,094
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,094
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0
</TABLE>
