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Stage Stores reports fourth quarter and annual results

RBR Staff Writer Published 04 March 2016

Stage Stores has reported results for the fourth quarter and fiscal year ended January 30, 2016.

The Company reported adjusted earnings per diluted share of $0.91 for the fourth quarter and $0.51 for fiscal 2015.

"Our holiday results were pressured by low oil prices, the devalued peso and record warm temperatures. Stores in the oil patch and along the Mexican border account for more than 40% of our sales, and the economic uncertainty in those areas negatively impacted our comp sales by 240 basis points during the fourth quarter. In light of these challenges and resulting soft traffic, we responded with higher than planned markdowns that enabled us to reduce inventory levels; ending the year more than 1% below last year," said Michael Glazer, President and Chief Executive Officer. "We saw positive sales performance in several non-apparel categories along with 20% growth in our direct-to-consumer business. As we look ahead to 2016, we expect external headwinds to continue to impact the business. However, we believe our investments in omni-channel and store upgrades will position our business to deliver improved performance."

Fourth Quarter and 2015 Results

For the fourth quarter, comparable sales decreased 3.4%. Sales decreased 4.2% to $502.6 million, as compared to $524.9 million in the prior year. Net income was $21.0 million, or $0.71 per diluted share, versus $1.36 per diluted share for the prior year. On an adjusted basis, net income was $26.8 million, or $0.91 per diluted share.

For fiscal 2015, comparable sales decreased 2.0%. Sales decreased 2.1% to $1,604.4 million for the fiscal year, as compared to $1,638.6 million in the prior year. Net income was $3.8 million, or $0.12 per diluted share, versus $0.96 per diluted share for the prior year. On an adjusted basis, net income was $16.2 million, or $0.51 per diluted share versus $1.18 per diluted share from continuing operations in the prior year. Three stores opened and 23 stores closed during the year.

Adjusted results exclude charges primarily associated with various strategic initiatives, including the consolidation of the Company's headquarters, impairments related to store closures and severance charges associated with a workforce reduction. The adjustments, after tax, totaled approximately $12.4 million, or $0.39 per diluted share, for the fiscal year, with approximately $5.9 million, or $0.20 per diluted share, incurred during the fourth quarter.

Share Repurchase Program Update

During the fourth quarter, the Company repurchased 5.2 million shares for $41.6 million under the previously announced Board-approved repurchase program. The Company has $58.4 million remaining under the program.

Mr. Glazer commented, "Our decision to repurchase shares reflects the Board's confidence in the Company's strategic plan as well as our belief that our share price trades at a discount to its intrinsic value. In addition, our capital allocation strategy reflects our commitment to the dividend and investing in our core business."

The share repurchase program has no expiration date and may be suspended or discontinued at any time. Any common shares acquired will be available to meet obligations under equity compensation plans and for general corporate purposes.

2016 Guidance

Sales are expected to be in a range of $1,530 to $1,560 million, assuming a -3% to -1% comparable sales. The Company has no plans to open stores and anticipates closing approximately 30 locations in 2016.

Earnings per diluted share are expected to be between $0.40 and $0.60. Weighted average diluted shares for the year are expected to be 27.8 million. The effective tax rate is estimated to be 36.2%.

Capital expenditures in 2016, net of construction allowances from landlords, are expected to be $72 million, compared to $87 million in 2015.

Mr. Glazer concluded, "We will continue to operate with disciplined expense controls and inventory management as we remain cautious in the current environment. We believe that investing in our omni-channel capabilities and stores will invigorate our business, drive sales, improve margins and create positive cash flow in 2016."


Source: Company Press Release