Form 10-Q
UNITED STATES 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 July 31, 1999
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 001-14035
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) 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
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 of Stage Stores, Inc.
outstanding as of September 7, 1999 was 26,832,284 shares of
Common Stock and 1,250,584 shares of Class B Common Stock.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Stage Stores, Inc.
Consolidated Condensed Balance Sheet
(in thousands, except par values)
(unaudited)
July 31, 1999 January 30, 1999
ASSETS
Cash and cash equivalents $ 8,970 $ 12,832
Undivided interest in accounts
receivable trust 66,729 69,816
Merchandise inventories, net 362,498 341,316
Prepaid expenses and other current
assets 71,153 84,473
Total current assets 509,350 508,437
Property, equipment and leasehold
improvements, net 223,431 233,263
Goodwill, net 88,183 92,551
Other assets 19,220 23,429
Total assets $ 840,184 $ 857,680
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 71,655 $ 82,779
Accrued expenses and other current
liabilities 42,715 52,706
Current portion of long-term debt 70,130 4,814
Total current liabilities 184,500 140,299
Long-term debt 444,186 487,968
Other long-term liabilities 26,616 25,021
Total liabilities 655,302 653,288
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, 26,832 and 26,718
shares issued and outstanding,
respectively 268 267
Class B common stock, par value $0.01,
non-voting, 3,000 shares authorized,
1,250 shares issued and outstanding 13 13
Additional paid-in capital 265,967 265,716
Accumulated deficit (75,372) (55,610)
Accumulated other comprehensive income (5,994) (5,994)
Stockholders' equity 184,882 204,392
Commitments and contingencies -- --
Total liabilities and
stockholders' equity $ 840,184 $ 857,680
The accompanying notes are an integral part of this statement.
Stage Stores, Inc.
Consolidated Condensed Statement of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
July 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998
Net sales $ 269,848 $ 271,805 $ 532,439 $ 544,593
Cost of sales and
related buying,
occupancy and
distribution
expenses 195,827 189,566 388,059 375,129
Gross profit 74,021 82,239 144,380 169,464
Selling, general and
administrative
expenses 66,888 67,853 128,107 129,483
Store opening and
closure program costs 15,465 1,708 16,214 2,025
Operating income (8,332) 12,678 59 37,956
Interest, net 12,646 11,423 24,757 21,890
Income (loss) before
income tax and
cumulative effect of
a change in
accounting principle (20,978) 1,255 (24,698) 16,066
Income tax expense
(benefit) (5,887) 490 (7,338) 6,266
Income (loss) before
cumulative effect of a
change in accounting
principle (15,091) 765 (17,360) 9,800
Cumulative effect of a
change in accounting
principle, net of
tax - reporting costs
of start-up activities -- -- (2,402) --
Net income (loss) $ (15,091) $ 765 $ (19,762) $ 9,800
Basic earnings (loss)
per common share data:
Basic earnings (loss)
per common share
before cumulative
effect of a change
in accounting
principle $ (0.54) $ 0.03 $ (0.62) $ 0.35
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 $ (0.54) $ 0.03 $ (0.71) $ 0.35
Basic weighted average
common shares
outstanding 28,022 27,874 27,990 27,833
Diluted earnings (loss)
per common share data:
Diluted earnings (loss)
per common share before
cumulative effect of a
change in accounting
principle $ (0.54) $ 0.03 $ (0.62) $ 0.34
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 $ (0.54) $ 0.03 $ (0.71) $ 0.34
Diluted weighted average
common shares
outstanding 28,022 28,582 27,990 28,569
The accompanying notes are an integral part of this statement.
Stage Stores, Inc.
Consolidated Condensed Statement of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
July 31, 1999 August 1, 1998
Cash flows from operating activities:
Net income (loss) $ (19,762) $ 9,800
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 27,578 14,411
Deferred income taxes (2,120) 513
Accretion of discount 591 527
Amortization of debt issue costs 1,517 1,205
Cumulative effect of a change in
accounting principle 2,402 --
Change in working capital (24,218) (78,067)
Total adjustments 5,750 (61,411)
Net cash used in operating activities (14,012) (51,611)
Cash flows from investing activities:
Additions to property, equipment and
leasehold improvements (11,045) (56,837)
Net cash used in investing activities (11,045) (56,837)
Cash flows from financing activities:
Proceeds from working capital facility 23,300 103,500
Proceeds from issuance of common stock 252 715
Payments on long-term debt (2,357) (192)
Net cash provided by financing
activities 21,195 104,023
Net decrease in cash and cash equivalents (3,862) (4,425)
Cash and cash equivalents:
Beginning of period 12,832 23,315
End of period $ 8,970 $ 18,890
Supplemental disclosure of cash flow
information:
Interest paid $ 22,311 $ 17,484
Income taxes paid (refunded) $ 162 $ (2,837)
The accompanying notes are an integral part of this statement.
Stage Stores, Inc.
Consolidated Statement of Stockholders' Equity
For the Six Months Ended July 31, 1999
(in thousands)
Shares Outstanding
Shares of common stock issued:
Beginning balance 26,718
Issuance of stock 114
Ending balance 26,832
Shares of Class B stock issued:
Beginning balance 1,250
Ending balance 1,250
Stockholders' Equity
Common stock issued:
Beginning balance $ 267
Issuance of stock 1
Ending balance 268
Class B stock issued:
Beginning balance 13
Ending balance 13
Additional Paid-in Capital:
Beginning balance 265,716
Issuance of stock 251
Ending balance 265,967
Accumulated deficit and
accumulated other
comprehensive income:
Beginning balance (61,604)
Comprehensive income
(loss):
Net income (loss) (19,762)
Other comprehensive
income (loss) --
Total comprehensive
income (loss) (19,762)
Ending balance (81,366)
Total Stockholders' Equity $ 184,882
Accumulated other
comprehensive income:
Beginning balance $ (5,994)
Ending balance $ (5,994)
The accompanying notes are an integral part of this statement.
Stage Stores, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
1. The accompanying unaudited consolidated condensed
financial statements of Stage Stores, Inc. ("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 the 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 January 30, 1999 filed with Stage Stores' Annual
Report on Form 10-K. The fiscal years discussed herein end on the
Saturday nearest to January 31 in the following calendar year.
For example, references to "1999" mean the fiscal year ending
January 29, 2000.
Stage Stores conducts its business primarily through its
wholly owned subsidiary Specialty Retailers, Inc. ("SRI") which,
as of July 31, 1999, operated 683 family apparel stores in thirty-
four states located throughout the United States. Stage Stores
and SRI are collectively referred to herein as the "Company".
2. Pursuant to the accounts receivable securitization
program (the "Accounts Receivable Program"), an indirect wholly
owned subsidiary of the Company, SRI Receivables Purchase Co.,
Inc. ("SRPC") purchases the accounts receivable generated by the
Company's private label credit card program. Such accounts
receivable are transferred to a master trust (the "Trust") which
has issued certain certificates to third parties representing
undivided interests in the Trust. SRPC owns an undivided interest
in the accounts receivable not supporting the certificates issued
to third parties by the Trust as set forth in the accompanying
Consolidated Condensed Balance Sheet. SRPC is a separate
corporate entity from the Company and SRPC's creditors have a
claim on its assets prior to those assets becoming available to
any creditor of the Company.
3. During the first quarter of 1999, 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 costs of start-up activities and
organization costs be expensed as incurred. The initial adoption
of SOP 98-5 during the quarter, reported as the cumulative effect
of a change in accounting principle, resulted in an after tax
charge of $2.4 million.
4. During the second quarter of 1999, the Company announced
a store closure program under which the Company will close
approximately 35 underperforming stores. Four of these stores were
closed during the second quarter of 1999 and the remaining stores
will be closed during the third quarter of 1999 after the completion
of their respective inventory liquidation programs. In connection
with the store closure program, the Company recorded $22.8
million of pretax costs during the second quarter of 1999, of
which $7.3 million is included in cost of sales while the
remaining $15.5 million is included in store opening and closure
program costs. Of the total $22.8 million charge, approximately
$2.5 million represents severance and lease termination costs,
approximately $1.6 million represents operating costs for the
stores in the closure program for the second quarter of 1999 and
the remainder are non-cash charges of which approximately $7.3
million represents a lower of cost or market reserve related to
the inventory to be liquidated in the stores to be closed, while
the balance relates primarily to the write-off of fixed assets
and intangibles associated with the stores in the closure
program.
5. The consolidating condensed financial information for
Stage Stores and its wholly owned subsidiaries is presented to
satisfy disclosure requirements pursuant to Sections 13 and 15(d)
of the Securities Exchange Act of 1934 with respect to wholly
owned subsidiaries of Stage Stores. Stage Stores does not prepare
separate financial statements and related disclosures for its
wholly owned subsidiaries SRI and Specialty Retailers, Inc. (NV)
because management has determined that such information is not
material to investors. SRI is the primary obligor under the 8.5%
Senior Notes due 2005 and 9% Senior Subordinated Notes due 2007
(see Note 5 to the Company's Consolidated Financial Statements
filed with Stage Stores' Annual Report on Form 10-K for the year
ended January 30, 1999). Stage Stores and Specialty Retailers,
Inc. (NV), a wholly owned subsidiary of Stage Stores which was
incorporated during June 1997, are guarantors of such
indebtedness.
SRPC securitizes the credit receivables of the Company. The
results of operations of SRPC are not indicative of the total
operating performance of the Company's Accounts Receivable
Program. For a summary of the total consolidated operating
performance of the Company's Accounts Receivable Program see Note
3 to the Company's Consolidated Financial Statements filed with
Stage Stores' Annual Report on Form 10-K for the year ended
January 30, 1999.
The following consolidating condensed financial information
for Stage Stores and its wholly-owned subsidiaries, including all
significant intercompany transactions eliminated in
consolidation, are presented below.
Consolidating Condensed Balance Sheet
July 31, 1999
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 7,022 $ -- $ -- $ 7,022
Undivided interest in
accounts receivable trust (11,571) 78,300 -- 66,729
Merchandise
inventories, net 362,498 -- -- 362,498
Prepaid expenses and
other current assets 65,403 5,750 -- 71,153
Total current assets 423,352 84,050 -- 507,402
Property, equipment and
leasehold improvements,
net 221,809 -- -- 221,809
Goodwill, net 88,183 -- -- 88,183
Other assets 17,109 2,051 -- 19,160
Investment in subsidiaries 38,474 -- (38,474) --
Total assets $ 788,927 $ 86,101 $ (38,474) $ 836,554
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 71,655 $ -- $ -- $ 71,655
Accrued expenses and
other current liabilities 39,954 2,749 -- 42,703
Current portion of
long-term debt 70,130 -- -- 70,130
Total current liabilities 181,739 2,749 -- 184,488
Long-term debt 414,186 30,000 -- 444,186
Intercompany
notes/advances 165,546 14,878 -- 180,424
Other long-term
liabilities 26,616 -- -- 26,616
Total liabilities 788,087 47,627 -- 835,714
Preferred stock -- -- -- --
Common stock -- -- -- --
Class B common stock -- -- -- --
Additional paid-in capital 3,317 33,166 (33,166) 3,317
Accumulated
earnings (deficit) 3,517 5,308 (5,308) 3,517
Accumulated other
comprehensive income (5,994) -- -- (5,994)
Stockholders' equity 840 38,474 (38,474) 840
Total liabilities and
stockholders' equity $ 788,927 $ 86,101 $ (38,474) $ 836,554
Consolidating Condensed Balance Sheet
July 31, 1999
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 2 $ 1,946 $ -- $ 8,970
Undivided interest in
accounts receivable trust -- -- -- 66,729
Merchandise
inventories, net -- -- -- 362,498
Prepaid expenses and
other current assets -- -- -- 71,153
Total current assets 2 1,946 -- 509,350
Property, equipment and
leasehold improvements, net -- 1,622 -- 223,431
Goodwill, net -- -- -- 88,183
Other assets -- 60 -- 19,220
Investment in subsidiaries 184,909 -- (184,909) --
Total assets $ 184,911 $ 3,628 $(184,909) $ 840,184
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ -- $ -- $ -- $ 71,655
Accrued expenses and
other current liabilities 12 -- -- 42,715
Current portion of
long-term debt -- -- -- 70,130
Total current liabilities 12 -- -- 184,500
Long-term debt -- -- -- 444,186
Intercompany notes/advances 17 (180,441) -- --
Other long-term liabilities -- -- -- 26,616
Total liabilities 29 (180,441) -- 655,302
Preferred stock -- -- -- --
Common stock 268 -- -- 268
Class B common stock 13 -- -- 13
Additional paid-in capital 265,967 160,292 (163,609) 265,967
Accumulated
earnings (deficit) (75,372) 23,777 (27,294) (75,372)
Accumulated other
comprehensive income (5,994) -- 5,994 (5,994)
Stockholders' equity 184,882 184,069 (184,909) 184,882
Total liabilities and
stockholders' equity $ 184,911 $ 3,628 $(184,909) $ 840,184
Consolidating Condensed Balance Sheet
January 30, 1999
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 10,882 $ -- $ -- $ 10,882
Undivided interest in
accounts receivable trust (13,228) 83,044 -- 69,816
Merchandise
inventories, net 341,316 -- -- 341,316
Prepaid expenses and
other current assets 77,648 6,825 -- 84,473
Total current assets 416,618 89,869 -- 506,487
Property, equipment and
leasehold improvements, net 231,499 -- -- 231,499
Goodwill, net 92,551 -- -- 92,551
Other assets 18,967 4,402 -- 23,369
Investment in subsidiaries 37,886 -- (37,886) --
Total assets $ 797,521 $ 94,271 $ (37,886) $ 853,906
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 82,779 $ -- $ -- $ 82,779
Accrued expenses and other
current liabilities 49,726 2,888 -- 52,614
Current portion of
long-term debt 4,814 -- -- 4,814
Total current liabilities 137,319 2,888 -- 140,207
Long-term debt 457,968 30,000 -- 487,968
Intercompany notes/advances 151,273 23,497 -- 174,770
Other long-term liabilities 25,021 -- -- 25,021
Total liabilities 771,581 56,385 -- 827,966
Preferred stock -- -- -- --
Common stock -- -- -- --
Class B common stock -- -- -- --
Additional paid-in capital 3,317 32,130 (32,130) 3,317
Accumulated
earnings (deficit) 28,617 5,756 (5,756) 28,617
Accumulated other
comprehensive income (5,994) -- -- (5,994)
Stockholders' equity 25,940 37,886 (37,886) 25,940
Total liabilities and
stockholders' equity $ 797,521 $ 94,271 $ (37,886) $ 853,906
Consolidating Condensed Balance Sheet
January 30, 1999
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
ASSETS
Cash and cash equivalents $ 2 $ 1,948 $ -- $ 12,832
Undivided interest in
accounts receivable trust -- -- -- 69,816
Merchandise
inventories, net -- -- -- 341,316
Prepaid expenses and
other current assets -- -- -- 84,473
Total current assets 2 1,948 -- 508,437
Property, equipment and
leasehold improvements, net -- 1,764 -- 233,263
Goodwill, net -- -- -- 92,551
Other assets -- 60 -- 23,429
Investment in subsidiaries 204,349 -- (204,349) --
Total assets $ 204,351 $ 3,772 $(204,349) $ 857,680
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ -- $ -- $ -- $ 82,779
Accrued expenses and
other current liabilities 92 -- -- 52,706
Current portion of
long-term debt -- -- -- 4,814
Total current liabilities 92 -- -- 140,299
Long-term debt -- -- -- 487,968
Intercompany notes/advances (133) (174,637) -- --
Other long-term liabilities -- -- -- 25,021
Total liabilities (41) (174,637) -- 653,288
Preferred stock -- -- -- --
Common stock 267 -- -- 267
Class B common stock 13 -- -- 13
Additional paid-in capital 265,716 160,040 (163,357) 265,716
Accumulated
earnings (deficit) (55,610) 18,369 (46,986) (55,610)
Accumulated other
comprehensive income (5,994) -- 5,994 (5,994)
Stockholders' equity 204,392 178,409 (204,349) 204,392
Total liabilities and
stockholders' equity $ 204,351 $ 3,772 $(204,349) $ 857,680
Consolidating Condensed Statement of Operations
Six Months Ended July 31, 1999
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
Net sales $ 532,439 $ -- $ -- $ 532,439
Cost of sales and related
buying, occupancy and
distribution expenses 388,059 -- -- 388,059
Gross profit 144,380 -- -- 144,380
Selling, general and
administrative expenses 131,504 (3,298) -- 128,206
Store opening and closure
program costs 16,214 -- -- 16,214
Operating income (loss) (3,338) 3,298 -- (40)
Interest expense, net 30,813 2,095 -- 32,908
Income (loss) before
income taxes (34,151) 1,203 -- (32,948)
Income tax expense (benefit) (10,694) 445 -- (10,249)
Income (loss) before equity
in net earnings of
subsidiaries and
cumulative effect of a
change in accounting
principle (23,457) 758 -- (22,699)
Equity in net earnings of
subsidiaries (448) -- 448 --
Income (loss) before
cumulative effect of a
change in accounting
principle (23,905) 758 448 (22,699)
Cumulative effect of a
change in accounting
principle, net of tax -
reporting costs of
start-up activities (1,196) (1,206) -- (2,402)
Net income (loss) $ (25,101) $ (448) $ 448 $ (25,101)
Consolidating Condensed Statement of Operations
Six Months Ended July 31, 1999
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
Net sales $ -- $ -- $ -- $ 532,439
Cost of sales and related
buying, occupancy and
distribution expenses -- -- -- 388,059
Gross profit -- -- -- 144,380
Selling, general and
administrative expenses 69 (168) -- 128,107
Store opening and closure
program costs -- -- -- 16,214
Operating income (loss) (69) 168 -- 59
Interest expense, net -- (8,151) -- 24,757
Income (loss) before
income taxes (69) 8,319 -- (24,698)
Income tax expense (benefit) -- 2,911 -- (7,338)
Income (loss) before equity
in net earnings of
subsidiaries and cumulative
effect of a change in
accounting principle (69) 5,408 -- (17,360)
Equity in net earnings of
subsidiaries (19,693) -- 19,693 --
Income (loss) before
cumulative effect of a
change in accounting
principle (19,762) 5,408 19,693 (17,360)
Cumulative effect of a
change in accounting
principle, net of tax -
reporting costs of
start-up activities -- -- -- (2,402)
Net income (loss) $ (19,762) $ 5,408 $ 19,693 $ (19,762)
Consolidating Condensed Statement of Operations
Six Months Ended August 1, 1998
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
Net sales $ 544,593 $ -- $ -- $ 544,593
Cost of sales and related
buying, occupancy and
distribution expenses 375,129 -- -- 375,129
Gross profit 169,464 -- -- 169,464
Selling, general and
administrative expenses 129,859 (440) -- 129,419
Store opening and closure
program costs 2,025 -- -- 2,025
Operating income (loss) 37,580 440 -- 38,020
Interest expense, net 31,004 (1,564) -- 29,440
Income (loss) before
income taxes 6,576 2,004 -- 8,580
Income tax expense 2,887 743 -- 3,630
Income (loss) before equity
in net earnings of
subsidiaries 3,689 1,261 -- 4,950
Equity in net earnings
of subsidiaries 1,261 -- (1,261) --
Net income $ 4,950 $ 1,261 $ (1,261) $ 4,950
Consolidating Condensed Statement of Operations
Six Months Ended August 1, 1998
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
Net sales $ -- $ -- $ -- $ 544,593
Cost of sales and related
buying, occupancy and
distribution expenses -- -- -- 375,129
Gross profit -- -- -- 169,464
Selling, general and
administrative expenses 43 21 -- 129,483
Store opening and closure
program costs -- -- -- 2,025
Operating income (loss) (43) (21) -- 37,956
Interest expense, net -- (7,550) -- 21,890
Income (loss) before
income taxes (43) 7,529 -- 16,066
Income tax expense -- 2,636 -- 6,266
Income (loss) before equity
in net earnings of
subsidiaries (43) 4,893 -- 9,800
Equity in net earnings
of subsidiaries 9,843 -- (9,843) --
Net income $ 9,800 $ 4,893 $ (9,843) $ 9,800
Consolidating Condensed Statement of Cash Flows
Six Months Ended July 31, 1999
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
Cash flows from operating
activities:
Net cash used in
operating activities $ (7,111) $ (6,647) $ -- $ (13,758)
Cash flows from investing
activities:
Investment in subsidiary -- -- -- --
Additions to property,
equipment and
leasehold improvements (11,045) -- -- (11,045)
Proceeds from the sales of
accounts receivable, net (6,647) 6,647 -- --
Net cash provided by
(used in) investing
activities (17,692) 6,647 -- (11,045)
Cash flows from financing
activities:
Proceeds from working
capital facility 23,300 -- -- 23,300
Proceeds from issuance of
common stock -- -- -- --
Proceeds from capital
contribution -- -- -- --
Payments on long-term debt (2,357) -- -- (2,357)
Net cash provided by
(used in) financing
activities 20,943 -- -- 20,943
Net decrease in cash and
cash equivalents (3,860) -- -- (3,860)
Cash and cash equivalents:
Beginning of period 10,882 -- -- 10,882
End of period $ 7,022 $ -- $ -- $ 7,022
Consolidating Condensed Statement of Cash Flows
Six Months Ended July 31, 1999
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
Cash flows from operating
activities:
Net cash used in operating
activities $ -- $ (254) $ -- $ (14,012)
Cash flows from investing
activities:
Investment in subsidiary (252) -- 252 --
Additions to property,
equipment and
leasehold improvements -- -- -- (11,045)
Proceeds from the sales of
accounts receivable, net -- -- -- --
Net cash provided by
(used in) investing
activities (252) -- 252 (11,045)
Cash flows from financing
activities:
Proceeds from working
capital facility -- -- -- 23,300
Proceeds from issuance
of common stock 252 -- -- 252
Proceeds from capital
contribution -- 252 (252) --
Payments on long-term debt -- -- -- (2,357)
Net cash provided by
(used in) financing
activities 252 252 (252) 21,195
Net decrease in cash and
cash equivalents -- (2) -- (3,862)
Cash and cash equivalents:
Beginning of period 2 1,948 -- 12,832
End of period $ 2 $ 1,946 $ -- $ 8,970
Consolidating Condensed Statement of Cash Flows
Six Months Ended August 1, 1998
(in thousands, unaudited)
SRI
Specialty Receivables SRI SRI
Retailers, Inc. Purchase Co. Eliminations Consolidated
Cash flows from operating
activities:
Net cash used in operating
activities $ (45,964) $ (5,633) $ -- $ (51,597)
Cash flows from investing
activities:
Intercompany notes/advances (1,285) -- -- (1,285)
Additions to property,
equipment and leasehold
improvements (56,837) -- -- (56,837)
Proceeds from the sales of
accounts receivable, net (6,640) 6,640 -- --
Dividend from subsidiary 1,007 -- (1,007) --
Net cash provided by
(used in) investing
activities (63,755) 6,640 (1,007) (58,122)
Cash flows from financing
activities:
Proceeds from working
capital facility 103,500 -- -- 103,500
Proceeds from issuance
of common stock -- -- -- --
Payments on long-term debt (192) -- -- (192)
Dividend paid -- (1,007) 1,007 --
Net cash provided by
(used in) financing
activities 103,308 (1,007) 1,007 103,308
Net decrease in cash and
cash equivalents (6,411) -- -- (6,411)
Cash and cash equivalents:
Beginning of period 23,299 -- -- 23,299
End of period $ 16,888 $ -- $ -- $ 16,888
Consolidating Condensed Statement of Cash Flows
Six Months Ended August 1, 1998
(in thousands, unaudited)
Specialty
Stage Retailers, Inc. Stage Stores
Stores, Inc. (NV) Eliminations Consolidated
Cash flows from operating
activities:
Net cash used in operating
activities $ (14) $ -- $ -- $ (51,611)
Cash flows from investing
activities:
Intercompany notes/advances (715) 2,000 -- --
Additions to property,
equipment and leasehold
improvements -- -- -- (56,837)
Proceeds from the sales of
accounts receivable, net -- -- -- --
Dividend from subsidiary -- -- -- --
Net cash provided by
(used in) investing
activities (715) 2,000 -- (56,837)
Cash flows from financing
activities:
Proceeds from working
capital facility -- -- -- 103,500
Proceeds from issuance of
common stock 715 -- -- 715
Payments on long-term debt -- -- -- (192)
Dividend paid -- -- -- --
Net cash provided by
(used in) financing
activities 715 -- -- 104,023
Net decrease in cash and
cash equivalents (14) 2,000 -- (4,425)
Cash and cash equivalents:
Beginning of period 16 -- -- 23,315
End of period $ 2 $ 2,000 $ -- $ 18,890
Item 2. 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 ability to
obtain financing on terms reasonably satisfactory to the Company
and the seasonality of demand for apparel which can be affected
by weather patterns, levels of competition, competitors'
marketing strategies, changes in fashion trends, availability of
product on normal payment terms and the failure to achieve the
expected results of merchandising and marketing plans and store
opening or closing plans. The occurrence of any of the above
could have a material adverse impact on the Company's operating
results. See additional risk factors discussed in the Company's
Annual Report on Form 10-K. Certain information herein contains
estimates which represent management's best judgement as of 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
nationally recognized brand name family apparel, accessories,
cosmetics and footwear in over 500 small towns and communities
throughout the 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 1998
Annual Report on Form 10-K.
Results of Operations
Sales for the three months ended July 31, 1999 decreased
0.7% to $269.8 million from $271.8 million in the comparable
period of 1998. Comparable store sales decreased 5.7% for the
three months ended July 31, 1999. Sales results for the three
months ended July 31, 1999 were negatively impacted by a
reduction in the number of promotional events and a lower level
of price discounting during the second quarter of 1999 as
compared to the second quarter of 1998. The reduction in
promotional events included, among other things, a shift in the
timing of the Company's traditional July Back to School Promotion
into the third quarter of 1999 to coincide with Texas' inaugural
sales tax holiday period which ran from August 6 through August
8, 1999.
For the six months ended July 31, 1999 sales results
decreased 2.2% to $532.4 million from $544.6 million in the
comparable period of 1998. Comparable store sales decreased 7.9%
for the six months ended July 31, 1999. Sales results for the six
months ended July 31, 1999 reflect the impact on the first
quarter of the heavy promotional and inventory management
activities which were put into place during the fall of 1998.
These initiatives negatively impacted the Company's merchandise
mix and to a lesser extent the Company's customer base. As a
result, the Company began the first part of the year with
significantly lower levels of inventory compared to the same
period last year on a comparable store basis, particularly with
respect to clearance merchandise. The lower levels of clearance
inventory, as well as continued aggressive pricing on this
clearance merchandise throughout February along with the factors
discussed above which impacted sales in the second quarter of
1999 were significant contributors to the decline in comparable
store sales for the six months ended July 31, 1999.
Sales for the first six months of 1999 were also negatively
impacted by the Company's efforts to transition and rebuild
merchandise assortments as well as improving the merchandise mix
across all merchandise categories. These efforts impacted the
content and quantity of merchandise inventory in certain
categories which depressed sales in these categories. Although
the Company has made significant improvements in its merchandise
mix during the first six months of 1999, this process will
continue into the early part of the third quarter in certain
merchandise categories.
Gross profit decreased 10.0% to $74.0 million for the three
months ended July 31, 1999 from $82.3 million in the comparable
period of 1998. Gross profit as a percent of sales decreased to
27.4% for the three months ended July 31, 1999 from 30.3% in
1998. Gross margin for the second quarter of 1999 included a $7.3
million provision related to the store closure program as
discussed below. Prior to this provision, gross margin was $81.3
million, or 30.1% of sales, for the second quarter of 1999. The
decline in gross profit as a percent of sales for the second
quarter of 1999 reflects the negative leverage associated with
the Company's fixed buying, occupancy and distribution expenses
which are included in cost of goods sold offset by a 100 basis
point improvement in the Company's merchandise margin during the
second quarter of 1999. The improvement in the merchandise
margin was the result of the reduction in the number of
promotional events and level of discounting during the quarter,
as discussed above.
For the six months ended July 31, 1999 gross profit
decreased 14.8% to $144.4 million from $169.5 million in the
comparable period of 1998. Gross profit as a percent of sales
decreased to 27.1% for the six months ended July 31, 1999 from
31.1% in 1998. The decline in gross margin as a percent of sales
reflects the impact during the first quarter of 1999 of
aggressive pricing on clearance inventory in February, lower
vendor discounts on new store inventory purchases and reduced
levels of store grand opening sales, which typically carry a
higher level of gross margin and the $7.3 million provision
associated with the store closure program as discussed below.
Also impacting gross margin for 1999 is the negative sales
leverage associated with the Company's fixed buying, occupancy
and distribution expenses which are included in cost of goods
sold.
Selling, general and administrative expenses for the three
months ended July 31, 1999 decreased 1.5% to $66.9 million from
$67.9 million for the comparable period of 1998 and, as a
percentage of sales, decreased to 24.8% from 25.0%. For the six
months ended July 31, 1999 selling, general and administrative
expenses decreased 1.1% to $128.1 million from $129.5 million in
the comparable period of 1998 and, as a percentage of sales,
increased to 24.1% from 23.8% in the comparable period of 1998.
Selling, general and administrative expenses for the first six
months of 1999 benefited from the positive impact of the
Company's credit card bank which became operational in the third
quarter of 1998 along with approximately $4.7 million of reduced
payroll and payroll related costs as well as the Company's
continued effort in controlling selling, general and
administrative expenses. The reduction in payroll related costs
was primarily associated with reduced vacation expense resulting
from a change in the Company's employee benefit program during
the first quarter of this year.
Store opening and closure program costs for the three months
ended July 31, 1999 reflect the costs associated with the store
closure program implemented during the second quarter. The store
closure program will result in the closure of approximately 35
underperforming stores. Four of these stores were closed during
the second quarter of 1999 and the remaining stores will be
closed during the third quarter of 1999 after the completion of
their respective inventory liquidation programs. In connection
with the store closure program, the Company recorded $22.8
million of pretax costs during the second quarter of 1999, of
which $7.3 million is included in cost of sales while the
remaining $15.5 million is included in store opening and closure
program costs. Of the total $22.8 million charge, approximately
$2.5 million represents severance and lease termination costs,
approximately $1.6 million represents operating costs for the
stores in the closure program for the second quarter of 1999 and
the remainder are non-cash charges of which approximately $7.3
million represents a lower of cost or market reserve related to
the inventory to be liquidated in the stores to be closed, while
the balance relates primarily to the write-off of fixed assets
and intangibles associated with the stores in the closure
program. There were no new store opening costs incurred during
the second quarter of 1999 as the current year store opening
program was completed during the first quarter, and in accordance
with the adoption of SOP 98-5 in the first quarter, the opening
costs associated with these stores were expensed at the time of
opening. Store opening and closure program costs during the
prior year were related to new store opening costs which were
expensed over the year in which the store was opened.
As a result of the factors discussed above, the Company had an
operating loss of $8.3 million for the three months ended July
31, 1999 as compared to operating income of $12.7 million in the
comparable period in 1998. For the six months ended July 31,
1999, operating income decreased to $0.1 million from $38.0
million for the same period of 1998.
Net interest expense for the three months ended July 31,
1999 increased 10.5% to $12.6 million from $11.4 million for the
comparable period in 1998 due to a higher level of average
borrowings outstanding. Net interest expense for the six months
ended July 31, 1999 increased 13.2% to $24.8 million from $21.9
million for the comparable period in 1998 also due to a higher
level of average borrowings outstanding associated with the
Company's expansion program and poor operating results in the
fall of 1998 and the first six months of 1999.
As a result of the foregoing, the Company's net loss for the
three months ended July 31, 1999 was $15.1 million as compared to
net income of $0.8 million for the comparable period in 1998.
The Company's net loss before the cumulative effect of a change
in accounting principle for the six months ended July 31, 1999
was $17.4 million as compared to net income of $9.8 million for
the comparable period in 1998.
In connection with the adoption of SOP 98-5, the Company
recorded a cumulative effect of a change in accounting principle,
net of tax charge of $2.4 million during the first quarter of
1999. The charge reflects the write-off of the unamortized
organizational costs associated with the Company's accounts
receivable trust and the recently formed credit card bank.
Seasonality and Inflation
The Company's business is seasonal and its quarterly sales and
profits are traditionally lower during the first three quarters
(February through October) and higher during the fourth quarter
(November through January). In addition, working capital
requirements fluctuate throughout the year, increasing
substantially in October and November due to requirements for
significantly higher inventory levels in anticipation of the
holiday season. During 1998, the Company experienced poor sales
and results of operations beginning in the second quarter which
impacted these traditional trends during those periods.
The following table shows certain unaudited financial
information for the Company by quarter (dollars in thousands):
1999 1998
Q1 Q2 Q1 Q2 Q3 Q4
Net sales $ 262,591 $ 269,848 $ 272,788 $ 271,805 $ 271,605 $ 357,349
Gross profit 70,359 74,021 87,225 82,239 75,252 89,593
Operating
income (loss) 8,391 (8,332) 25,278 12,678 7,226 7,458
Quarters'
operating
income as a
percent of
total -- -- 48% 24% 14% 14%
Income (loss)
before
cumulative
effect of a
change in
accounting
principle $ (2,269) $ (15,091) $ 9,035 $ 765 $ (3,152) $ (2,934)
Net income
(loss) $ (4,671) $ (15,091) $ 9,035 $ 765 $ (3,152) $ (2,934)
The Company does not believe that inflation had a material
effect on its results of operations during the past two years.
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 decreased $43.2 million to
$324.9 million at July 31, 1999 from $368.1 million at January
30, 1999. The most significant changes in working capital were:
(i) an increase in inventories associated with the seasonal build
of inventories offset by (ii) the inclusion of $65.3 million of
the outstanding balance under the Company's $100 million working
capital and letter of credit facility and the $100 million
expansion revolving credit facility (the "Credit Facility") in
current portion of long-term debt. This amount reflects the
requirement contained in the Credit Facility agreement to reduce
the aggregate balance under the facility to $100.0 million for a
period of 45 days prior to July 2000. Outstanding borrowings
under the Credit facility were $165.3 million at July 31, 1999 as
compared to $142.0 million at January 30, 1999. The entire
balance outstanding at January 30, 1999 was included in long-term
debt as the Credit Facility was modified to allow a maximum of
$170.0 million to be outstanding for thirty days during the
period of January 27, 1999 through July 31, 1999.
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 $44.0 million during each of 1999
and 2000. Capital expenditures are generally for new store
openings, remodeling of existing stores and customary store
maintenance. Capital expenditures for the first six months of
1999 were $11.1 million as compared to $56.8 million for the
comparable period of 1998. The reduction was a result of a
decrease in the number of new stores opened as well as the
completion of the conversion of the remaining CR Anthony stores
to the Company's format and trade names, which occurred during
the first and second quarters of 1998. Management expects
capital expenditures to be approximately $23.0 million during
1999, consisting primarily of 10 new store openings, remodeling
of existing stores and the implementation of a new merchandising
system. Required aggregate principal payments on existing debt,
excluding the Credit Facility, total $4.8 million and $34.8
million for 1999 and 2000, respectively. Included in the $34.8
million of principle repayments in 2000 are the $30.0 million in
aggregate principle amount 12.5% Trust Certificate-Backed Notes
("SRPC Notes"). The SRPC Notes are collateralized by the retained
interest in the Accounts Receivable Program. Principle repayments
on the SRPC Notes are scheduled to begin during December 2000.
The Company currently expects to refinance the SRPC Notes prior
to that date. Therefore, the Company does not believe this will
have an impact on its liquidity or cash flow for 1999 or 2000
although there can be no assurances that the Company will
successfully refinance the SRPC Notes on terms favorable to the
Company.
The Company's current short-term liquidity needs are
provided by (i) existing cash balances, (ii) operating cash
flows, (iii) the Accounts Receivable Program, (iv) the Credit
Facility (v) and normal trade credit terms from the vendor and
factor community. 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. Outstanding borrowings under the
Credit Facility were $165.3 million at July 31, 1999 and $145.3
million at August 28, 1999 as compared to $149.2 million at
August 1, 1998 and $160.5 million at August 29, 1998. The
Company had $22.9 million of availability under the Credit
Facility at July 31, 1999 and $43.8 million at August 28, 1999.
The outstanding balances under the revolving certificates
associated with the Accounts Receivable Program were $102.9
million and $115.6 million at July 31, 1999 and January 30, 1999,
respectively, while outstanding balances under the term
certificates were $165.0 million at both July 31, 1999 and
January 30, 1999. Principal repayments under the term
certificates are scheduled to commence on December 31, 1999.
However, the Company currently expects to refinance these
certificates prior to that date. Therefore, the Company does not
believe this will have an impact on its liquidity or cash flow
for 1999 although there can be no assurances that the Company
will successfully refinance the Accounts Receivable Program on
terms favorable to the Company.
The Company continually monitors its liquidity position and
compliance with its various debt agreements. During the third
and fourth quarters of 1998, the Company's Credit Facility was
amended to lessen certain covenant requirements and clarify
certain defined terms contained in the Credit Facility. In
addition, the Credit Facility was modified to allow a maximum of
$170.0 million of borrowings to be outstanding for thirty days
during the period from January 27, 1999 through July 31, 1999.
This requirement had been satisfied as of February 25, 1999. The
Company believes the current covenant levels provide sufficient
flexibility to allow the Company to execute its business plan.
Management believes that funds provided by operations,
together with funds available under the Credit Facility, the
Accounts Receivable Program and the normal trade credit terms
from the vendor and factor community will be adequate to meet the
Company's anticipated requirements for working capital, interest
payments, planned capital expenditures and principal payments on
debt. Estimates as to working capital needs and other
expenditures may be materially affected if the foregoing sources
are not available or do not otherwise provide sufficient funds to
meet the Company's obligations.
Year 2000
The Year 2000 issue relates to the way computer systems and
programs define calendar dates. They could fail or make
miscalculations due to interpreting a date including "00" to mean
1900, not 2000. Also, other systems and equipment may contain
imbedded hardware or software that may have a time element and
affect their operation. The Company began working on the Year
2000 compliance issue in 1996 and heightened its focus and
resource commitment in 1997 with the establishment of a
formalized project plan and management oversight function. The
Company has divided its Year 2000 risk assessment and remediation
efforts into the following three categories: information
systems, peripheral systems and hardware and third party vendors.
The Company has completed the evaluation of its critical
information systems infrastructure for Year 2000 compliance and
has developed detailed work plans to achieve compliance prior to
possible system failures. The systems have been segregated into
the following five logical, manageable groups: (1) human
resource, time keeping and payroll systems (2) point-of-sale and
sales audit systems (3) credit systems (4) financial reporting
and accounts payable systems and (5) merchandising systems. Year
2000 remediation is being addressed through a combination of
modifications or upgrades to existing applications or
replacement. The Company has dedicated in-house resources and
has contracted with third party vendors to complete the necessary
coding changes, testing and installation. In August of 1999, the
Company completed the installation of a new merchandising system
which is year 2000 compliant. The Company is currently addressing
various post-implementation issues; however, the Company does not
anticipate that these issues will have a material impact on the
results of operations of the Company. The Company believes Year
2000 readiness related to critical information systems
infrastructure is substantially complete.
In addition, the Company has substantially completed an
inventory of its major peripheral systems and hardware and is in
the process of assessing and remediating Year 2000 non-compliance
issues. These include, but are not limited to, communications
networks, personal computers and network systems, printers, store
register systems and processors, scanners and emergency power
systems. The Company believes Year 2000 readiness related to
peripheral systems and hardware is substantially complete.
The Company's plan is to have addressed its significant
Year 2000 issues prior to being affected by them. However, if the
Company identifies additional risks related to Year 2000
compliance or its progress in planned remediation efforts
deviates from the anticipated timeline, the Company will develop
contingency plans as deemed necessary at that time. The aggregate
cost of the Company's Year 2000 efforts paid to third parties to
assist in remediation has been approximately $2.3 million. These
costs are being expensed as incurred. These amounts do not
include any costs associated with the implementation of
contingency plans or the cost associated with the replacement of
information systems, hardware or equipment, substantially all of
which would be capitalized. The failure to correct a material
Year 2000 problem could result in an interruption in certain
normal business activities or operations. Presently, the Company
does not anticipate any material disruption in its operations as
a result of any failure by the Company to be in compliance.
The Company has limited information
concerning Year 2000 compliance status of its suppliers. The
Company has, however, identified its major suppliers and has sent
a survey letter which is being used to evaluate the potential
risk to the Company if these vendors fail to remedy their Year
2000 issues. In the event that the Company or any of its
significant suppliers does not successfully and timely achieve
Year 2000 compliance, the Company's business or operations could
be adversely affected.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time the Company and its subsidiaries are
involved in various litigation matters arising in the ordinary
course of its business. In addition, on March 30, 1999, a class
action lawsuit was filed against the Company and certain of its
officers, directors and stockholders in the United States
District Court for the Southern District of Texas by John C.
Weld, Jr., a stockholder who purchased 125 shares of the
Company's common stock on August 3, 1998, alleging violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder (the "Weld Suit"). The
Company believes that the allegations of the Weld Suit are
without merit and intends to defend the case vigorously. On July
23, 1999, the Company filed a motion to dismiss the Weld Suit.
The United States District Court for the Southern District of
Texas is not expected to render a final opinion on the motion to
dismiss before the fall of 1999 or spring of 2000.
Management believes that none of the matters in which the
Company or its subsidiaries are currently involved, either
individually or in the aggregate, is material to the financial
position, results of operations or cash flows of the Company or
its subsidiaries.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The 1999 Annual Meeting of Shareholders of the Company was
held on May 13, 1999. The following matters were submitted to a
vote of the Company's shareholders:
1. The election of eight directors (constituting
the entire board of directors) for the ensuing year and until
their successors are duly elected and qualified. The results of
the election for each such director were as follows:
Votes
Directors Votes For Withheld
Carl Tooker 23,281,060 98,045
Jack Bush 23,293,109 85,996
Harold Compton 23,296,029 83,076
Robert Huth 23,291,719 87,386
Richard Jolosky 23,293,819 85,286
James Marcum 23,282,240 96,865
David Thomas 23,296,219 82,886
John Wiesner 23,291,763 87,342
2. The ratification of the selection of
PricewaterhouseCoopers LLP as the auditors to audit the
consolidated financial statements of the Company and the
financial statements of certain of its subsidiaries for the year
ending January 29, 2000. The results of the vote with respect to
such proposal were as follows:
Votes
Votes For Against Abstentions
Ratification of
Selection of
Independent
Auditors 23,352,928 20,720 5,457
3. The approval of the Amended and Restated 1996 Equity
Incentive Plan. The results of the vote with respect such
proposal were as follows:
Votes Abstentions and
Votes For Against Broker Non-Votes
Approval of the
Amended and Restated
1996 Equity
Incentive Plan 9,936,624 8,932,942 4,509,539
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed a News Release on Form 8-K dated May 6,
1999 related to Stage Stores, Inc. first quarter 1999 sales
results.
The Company filed a News Release on Form 8-K dated May 20,
1999 related to Stage Stores, Inc. first quarter 1999
results of operations.
The Company filed a News Release on Form 8-K dated August 5,
1999 related to Stage Stores, Inc. second quarter 1999 sales
results.
The Company filed a News Release on Form 8-K dated August
19, 1999 related to Stage Stores, Inc. second quarter 1999
results of operations.
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.
September 10, 1999 /s/ Carl E. Tooker
(Date) Carl E. Tooker
Chairman, Chief Executive Officer
and President
(principal executive officer)
September 10, 1999 /s/ James A. Marcum
(Date) James A. Marcum
Vice Chairman 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> 1000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> JUL-31-1999
<CASH> 8,970
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 362,498
<CURRENT-ASSETS> 509,350
<PP&E> 223,431
<DEPRECIATION> 0
<TOTAL-ASSETS> 840,184
<CURRENT-LIABILITIES> 184,500
<BONDS> 444,186
<COMMON> 281
0
0
<OTHER-SE> 184,601
<TOTAL-LIABILITY-AND-EQUITY> 840,184
<SALES> 532,439
<TOTAL-REVENUES> 532,439
<CGS> 388,059
<TOTAL-COSTS> 388,059
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,757
<INCOME-PRETAX> (24,698)
<INCOME-TAX> (7,338)
<INCOME-CONTINUING> (17,360)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,402)
<CHANGES> 0
<NET-INCOME> (19,762)
<EPS-BASIC> (0.71)
<EPS-DILUTED> (0.71)
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