FORM 8-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
May 20, 1999
(Date of Report, date of earliest event reported)
Stage Stores, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-14035
DELAWARE 76-0407711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identifications No.)
10201 Main Street, Houston, 77025
Texas (Zip Code)
(Address of principal executive
offices)
(713) 667-5601
(Registrant's telephone number, including area code)
Not Applicable
(Former name or address, if changed since last report)
ITEM 5. Other Events.
A press release regarding the Company's first quarter 1999
results of operations and certain other matters was issued by the
Company on May 20, 1999 and is attached hereto as Exhibit 99.1.
ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
99.1 Press release dated May 20, 1999 issued by the
Company.
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.
May 20, 1999 /s/ James A. Marcum
(Date) James A. Marcum
Vice Chairman and,
Chief Financial Officer
NEWS RELEASE
CONTACT:
Bob Aronson
Director of Investor Relations
(800) 579-2302
FOR IMMEDIATE RELEASE
STAGE STORES, INC. ANNOUNCES FIRST QUARTER 1999 RESULTS
-- Net Loss of $0.08 Per Share From Operations Reported --
______________________________
HOUSTON, TX, May 20, 1999 -- Stage Stores, Inc. (NYSE: SGE) today
announced results for the first quarter ended May 1, 1999.
Net sales for the first quarter of 1999 decreased 3.7% to $262.6
million from $272.8 million for the same period last year. Sales
for the first quarter of 1998 included the grand opening volumes
associated with the conversion of 69 C.R. Anthony stores during
that period. Comparable store sales decreased 10.1% during the
quarter. The net loss for the quarter before the cumulative
effect of a change in accounting principle was $2.3 million, or
$0.08 per share on a diluted basis, as compared to net income of
$9.0 million, or $0.32 per share on a diluted basis, a year ago.
After the cumulative effect of a change in accounting principle,
the net loss for this year's first quarter was $0.17 per share on
a diluted basis.
Commenting on the results, Carl E. Tooker, Chairman, President
and Chief Executive Officer, stated, "We are disappointed with
the first quarter's results which reflect the negative impact of
the heavy promotional and inventory management activities that we
put into place during the fourth quarter of 1998. As a result of
these initiatives, we began the quarter with lower than expected
levels of clearance product, which hurt February's sales, and
lower overall inventory levels, which caused our Easter period
sales to be softer than anticipated. We focused on rebuilding
our merchandise assortments throughout the period and ended the
first quarter with inventory levels on plan. As a result, we are
beginning to see initial signs of improvement in several
merchandise categories."
Mr. Tooker continued, "With regard to gross margins, the year-
over-year decline as a rate of sales is reflective of several
factors. First, there was a lack of sales leverage with respect
to the fixed cost component of cost of sales as a result of our
negative comparable store sales.
Next, there was significantly less vendor discounts on new store
inventory purchases and the level of grand opening sales volumes
which typically enjoy higher gross margins was lower this year
than last year, both related to our reduced store opening
program. Finally, the level of margins recognized with respect
to clearance inventories was lower as a rate of sales as a result
of the continued acceleration of our clearance activities during
the early part of the quarter."
Mr. Tooker further stated, "In light of our current business
trends, we continued to prudently control our selling, general
and administrative ("SG&A") expenses during the quarter. As a
result of our efforts, SG&A expenses, on an absolute dollar
basis, were relatively flat with last year despite operating 72
more stores. The majority of these savings were payroll related
costs, and we also benefited from improved performance in our
credit card portfolio. We will continue to focus on reducing our
SG&A expenses."
During the quarter, the Company adopted the Accounting Standards
Executive Committee's Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" ("SOP 98-5") which requires
that all start-up costs be expensed as incurred. The initial
adoption of SOP 98-5 during the quarter resulted in an after tax
charge of $2.4 million, or $0.09 per share on a diluted basis.
In addition, the adoption of SOP 98-5 requires that store opening
costs be expensed as incurred. As a result, store opening costs
were higher this quarter despite the lower number of store
openings due to the timing of the recognition of these expenses.
Mr. Tooker concluded, "As we continue to identify ways of
improving our financial performance and thus enhance shareholder
value, we have adopted a store closure plan and, as a result,
will close 35 under-performing stores. The majority of these
stores will close over the next six months upon the completion of
an inventory liquidation program. These stores all had negative
contributions during 1998 and the majority are stores whose
square footage are too small to operate effectively as a Stage
concept. The remaining stores are located in markets in which we
currently have at least one other store and the opportunity in
the market does not justify multiple locations. In connection
with this store closure program, we expect to record a $20.0
million pretax charge during the second quarter of 1999. We
believe the closure of these stores will be cash flow positive to
the Company upon completion of the store closure program."
Stage Stores, Inc. brings nationally recognized brand name
apparel, accessories, cosmetics and footwear for the entire
family to small towns and communities throughout
the United States. The company operated 688 stores in 34 states
at the end of the first quarter, primarily under the Stage,
Bealls and Palais Royal trade names.
Any statements in this press release that may be considered
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially. These
risks and uncertainties are discussed in periodic reports filed
by the Company with the Securities and Exchange Commission that
the Company urges investors to consider.
(Tables to Follow)
Stage Stores, Inc.
Consolidated Condensed Statement of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
5/1/99 5/2/98
Net sales $ 262,591 $ 272,788
Cost of sales and related buying,
occupancy and distribution expenses 192,232 185,563
Gross profit 70,359 87,225
Selling, general and administrative expenses 61,219 61,630
Store opening and closure costs 749 317
Operating income 8,391 25,278
Interest, net 12,111 10,467
Income (loss) before income tax and cumulative
effect of a change in accounting principle (3,720) 14,811
Income tax expense (benefit) (1,451) 5,776
Income (loss) before cumulative effect of a
change in accounting principle (2,269) 9,035
Cumulative effect of a change in accounting
principle, net of tax - reporting costs of
start-up activities (2,402) --
Net income (loss) $ (4,671) $ 9,035
Basic earnings (loss) per common share data:
Basic earnings (loss) per common share before
cumulative effect of a change in accounting
principle $ (0.08) $ 0.33
Cumulative effect of a change in accounting
principle, net of tax - reporting costs of
start-up activities (0.09) --
Basic earnings (loss) per common share $ (0.17) $ 0.33
Basic weighted average common shares
outstanding 27,987 27,792
Diluted earnings (loss) per common share data:
Diluted earnings (loss) per common share
before cumulative effect of a change in
accounting principle $ (0.08) $ 0.32
Cumulative effect of a change
in accounting principle, net of tax -
reporting costs of start-up activities (0.09) --
Diluted earnings (loss) per common share $ (0.17) $ 0.32
Diluted weighted average common shares
outstanding 27,987 28,507
Comparable store sales data (10.1%) 3.4%
Stage Stores, Inc.,
Consolidated Condensed Balance Sheet
(in thousands)
(unaudited)
5/1/99 1/30/99 5/2/98
ASSETS
Cash and cash equivalents $ 8,625 $ 12,832 $ 20,460
Undivided interest in accounts
receivable trust 68,534 69,816 55,567
Merchandise inventories, net 363,352 341,316 354,169
Other current assets 71,710 84,473 83,103
Total current assets 512,221 508,437 513,299
Fixed assets, net 233,580 233,263 194,838
Goodwill, net 91,828 92,551 94,752
Other assets 20,695 23,429 26,254
$ 858,324 $ 857,680 $ 829,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 79,046 $ 82,779 $ 88,124
Accrued expenses and other current
liabilities 53,364 52,706 62,615
Current portion of long-term debt 4,829 4,814 2,686
Total current liabilities 137,239 140,299 153,425
Long-term debt including
credit facilities 495,724 487,968 449,652
Other long-term liabilities 25,419 25,021 11,462
Total liabilities 658,382 653,288 614,539
Stockholders' equity 199,942 204,392 214,604
$ 858,324 $ 857,680 $ 829,143
Stage Stores, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
5/1/99 5/2/98
Cash flows from operating activities:
Net income (loss) $ (4,671) $ 9,035
Adjustments to net income (loss):
Depreciation and amortization 8,620 6,290
Amortization of debt issue costs and
accretion of discount 1,044 863
Other 2,194 607
Changes in working capital (11,575) (45,785)
Net cash used in operating activities (4,388) (28,990)
Cash flows from investing activities:
Additions to fixed assets (7,526) (28,486)
Net cash used in investing activities (7,526) (28,486)
Cash flows from financing activities:
Proceeds from working capital facility 7,650 54,300
Proceeds from issuance of common stock 221 491
Payments on long-term debt (164) (170)
Net cash provided by financing
activities 7,707 54,621
Net decrease in cash and cash equivalents (4,207) (2,855)
Cash and cash equivalents:
Beginning of period 12,832 23,315
End of period $ 8,625 $ 20,460
