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Stage Stores, Inc.$2.40$.01.42%

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 Stage Stores Reports First Quarter Results and Declares Quarterly Cash Dividend
   Thursday, May 18, 2017 6:00:00 AM ET

Stage Stores, Inc. (SSI ) today reported financial results for the first quarter ended April 29, 2017. For the first quarter, the net loss was $19.0 million, or a $0.70 loss per diluted share. On an adjusted basis, first quarter net loss was $15.0 million, or $0.55 per diluted share, compared to an adjusted loss of $0.56 in the first quarter of 2016.

"We are pleased to have improved adjusted earnings to last year. Our team has worked hard to increase merchandise margins by nearly 170 basis points, control inventories which were down 6% excluding Gordmans, and grow our direct-to-consumer business in the first quarter. After a challenging February in which we saw negative double digit comps, we began to gain momentum and our business improved significantly during the combined March and April period," said Michael Glazer, President and Chief Executive Officer. "While we expect retail headwinds to continue in the near term, we believe that our selective acquisition of prime Gordmans’ assets allows us to diversify with an off-price business model. We expect the acquisition to add scale to our business and be meaningfully accretive to our earnings in 2018."

As part of its commitment to make strategic investments in the recently acquired Gordmans off-price business and its existing operations, the Company also announced that its Board of Directors declared a reduced quarterly cash dividend of $0.05 per share on the Company’s common stock ($0.20 annually), payable on June 14, 2017 to shareholders of record at the close of business on May 30, 2017.

Mr. Glazer continued, "We plan to make strategic investments in the Gordmans business as well as our existing Stage business to increase store productivity, enhance our merchandise assortment and marketing programs, and drive growth in the Stage omnichannel business. We believe the dividend adjustment was the appropriate action as we reallocate resources to invest in our operations, increase liquidity, and create financial flexibility to support our long-term plans."

First Quarter Reported Results

For the first quarter, comparable sales decreased 9.6%. Total sales decreased 7.3% to $308.6 million, as compared to $332.8 million in the prior year. Net loss was $19.0 million, or $0.70 per diluted share, versus a net loss of $0.57 per diluted share for the prior year.

On an adjusted basis, net loss was $15.0 million, or $0.55 per diluted share, versus an adjusted loss of $0.56 per diluted share in the prior year. Adjusted first quarter 2017 results exclude after-tax charges primarily associated with the Gordmans acquisition of approximately $4.0 million, or $0.15 per diluted share. The prior year’s adjusted first quarter results exclude after-tax charges associated with store closures of approximately $0.4 million, or $0.01 per diluted share.

2017 Guidance

The Company expects sales, inclusive of the Gordmans business, to be in a range of $1,565 to $1,620 million, assuming comparable sales for the existing Stage business in a range of -4% to -8%. Total sales include the impact of a 53rd week, while comparable sales reflect a 52-week period.

Adjusted loss per diluted share is expected to be between $0.95 and $1.55, inclusive of the Gordmans business. Adjusted 2017 guidance excludes after-tax charges associated with the Gordmans acquisition, store closures and other strategic initiatives totaling approximately $0.18 per diluted share. Weighted average shares for the year are expected to be approximately 27.5 million. The effective tax rate is projected to be between 32% and 35%.

Capital expenditures in 2017, net of construction allowances from landlords, are expected to be $40 million, compared to $67 million in 2016.

Conference Call / Webcast Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its results. Interested parties may participate in the Company’s conference call by dialing 844-415-6993. Alternatively, interested parties may listen to a live webcast of the conference call through the Investor Relations section of the Company’s website (corporate.stage.com) under the "Webcasts" caption. A replay of the conference call will be available online until midnight on Friday, June 2, 2017.

About Stage Stores

Stage Stores, Inc. is a leading retailer of trend-right, name-brand values for apparel, accessories, cosmetics, footwear and home goods. The Company operates in 42 states through approximately 800 BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores and approximately 50 GORDMANS off-price stores, as well as an e-commerce website at www.stage.com. For more information about Stage Stores, visit the Company’s website at corporate.stage.com.

Use of Adjusted (Non-GAAP) Financial Measures

The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures help to facilitate comparisons of Company operating performance across periods. This release includes non-GAAP financial measures identified as "adjusted" results. A reconciliation of all non-GAAP financial measures to the most comparable GAAP financial measures is provided in a table included with this release.

Caution Concerning Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" and similar expressions generally identify forward-looking statements. Similarly, descriptions of the Company’s objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are based upon management’s then-current views and assumptions regarding future events and operating performance. Although management believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of its knowledge, forward-looking statements involve risks, uncertainties and other factors which may materially affect the Company’s business, financial condition, results of operations or liquidity.

Forward-looking statements are not guarantees of future performance and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, economic conditions, cost and availability of goods, inability to successfully execute strategic initiatives, competitive pressures, economic pressures on the Company and its customers, freight costs, the risks discussed in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC"), and other factors discussed from time to time in the Company’s other SEC filings. This release should be read in conjunction with such filings, and you should consider all of such risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the Company makes on related subjects in its public announcements and SEC filings.

(Tables to Follow)

                                                   
                                                                                                                                                                Stage Stores, Inc.
                                                                                                                                                  Condensed Consolidated Statements of Operations
                                                                                                                                                       (in thousands, except per share data)
                                                                                                                                                                    (Unaudited)
                                                                                                              
                                                                                                                                                                                                                      Three Months Ended
                                                                                                             ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                   April 29, 2017                                                                                    April 30, 2016
                                                                                                             -------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------
                                                                                                                          Amount                  % to Sales (a)                                                         Amount                  % to Sales (a)
                                                                                                             ---------------------------------                                          ----------------                                          ---------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                              
Net sales                                                                                                      $ 308,607                                                                  100.0 %                                                   $ 332,750                                                                     100.0 %
Cost of sales and related buying, occupancy                                                                      246,389                                                79.8 %                                                     265,763                                                   79.9 %
and distribution
expenses
                                                                                                             ----------  --------------------                                           ------- -------                                           ----------  --------------------                                           ---------- ---------
Gross profit                                                                                                      62,218                                                                   20.2 %                                                      66,987                                                                      20.1 %
Selling, general and administrative expenses                                                                      88,509                                                                   28.7 %                                                      90,144                                                                      27.1 %
Interest expense                                                                                                   1,586                                                 0.5 %                                                       1,029                                                    0.3 %
                                                                                                             --------------------------------                                           ------- -------                                           --------------------------------                                           ---------- ---------
Loss before income tax                                                                                           (27,877 )                                                                 (9.0 )%                                                    (24,186 )                                                                    (7.3 )%
Income tax benefit                                                                                                (8,890 )                                                                 (2.9 )%                                                     (8,726 )                                                                    (2.6 )%
                                                                                                             --------------------------------                                           ------- -------                                           --------------------------------                                           ---------- ---------
Net loss                                                                                                       $ (18,987 )                                                                 (6.2 )%                                                  $ (15,460 )                                                                    (4.6 )%
                                                                                                             === ======= ====================                                           ======= =======                                           === ======= ====================                                           ========== =========
                                                                                                                                                                                                                                                                                                                              
Basic loss per share data:
  Basic loss per share                                                                                         $   (0.70 )                                                                                                                          $   (0.57 )
                                                                                                             === ======= ====================                                                                                                     === ======= ====================
  Basic weighted average shares outstanding                                                                       27,268                                                                                                            26,932  
                                                                                                             ================================                                                                                                     ================================
                                                                                                                                                                                                                                                                                                                              
Diluted loss per share data:
  Diluted loss per share                                                                                       $   (0.70 )                                                                                                                          $   (0.57 )
                                                                                                             === ======= ====================                                                                                                     === ======= ====================
  Diluted weighted average shares outstanding                                                                     27,268                                                                                                            26,932  
                                                                                                             ================================                                                                                                     ================================
                                                                                                                                                                                                                                                                                                                              
(a) Percentages may not foot due to rounding.
 
                                                                                                     
                                                                                                           Stage Stores, Inc.
                                                                                                  Condensed Consolidated Balance Sheets
                                                                                                    (in thousands, except par value)
                                                                                                               (Unaudited)
                                                                                                                                                                                                      
                                                                                                                                   April 29, 2017                                                              January 28, 2017
                                                                                                                         ----------------------------------                                          ------------------------------------
                          ASSETS
---------------------------------------------------------
Cash and cash equivalents                                                                                                   $  21,688                                                                     $  13,803
Merchandise inventories, net                                                                                                  477,189                                                                       409,384
Prepaid expenses and other current assets                                                                                      46,054                                                     41,574  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total current assets                                                                                                        544,931                                                                       464,761
                                                                                                                                                                                                      
Property, equipment and leasehold improvements, net                                                                           277,285                                                                       284,110
Intangible assets                                                                                                              15,235                                                                        15,235
Other non-current assets, net                                                                                                  24,164                                                     22,883  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total assets                                                                                                              $ 861,615                                                  $ 786,989  
                                                                                                                         ==== ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                      
           LIABILITIES AND STOCKHOLDERS’ EQUITY
---------------------------------------------------------
Accounts payable                                                                                                            $ 137,289                                                                     $ 101,985
Accrued expenses and other current liabilities                                                                                 71,897                                                     66,685  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total current liabilities                                                                                                   209,186                                                                       168,670
                                                                                                                                                                                                      
Long-term debt obligations                                                                                                    219,756                                                                       163,749
Other long-term liabilities                                                                                                    73,610                                                     74,410  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total liabilities                                                                                                           502,552                                                    406,829  
                                                                                                                         ---------------------------------                                           -----------------------------------
                                                                                                                                                                                                      
Commitments and contingencies
                                                                                                                                                                                                      
Common stock, par value $0.01, 100,000 shares authorized,                                                                         326                                                                           323
32,611
and 32,340 shares issued, respectively
Additional paid-in capital                                                                                                    412,548                                                                       410,504
Treasury stock, at cost, 5,175 shares, respectively                                                                           (43,347 )                                                                     (43,286 )
Accumulated other comprehensive loss                                                                                           (5,517 )                                                                      (5,648 )
Retained (deficit) earnings                                                                                                    (4,947 )                                                                      18,267  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total stockholders’ equity                                                                                                  359,063                                                    380,160  
                                                                                                                         ---------------------------------                                           -----------------------------------
  Total liabilities and stockholders’ equity                                                                                $ 861,615                                                  $ 786,989  
                                                                                                                         ==== ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                     
                                                                           
                                                                                                                   Stage Stores, Inc.
                                                                                                     Condensed Consolidated Statements of Cash Flows
                                                                                                                     (in thousands)
                                                                                                                       (Unaudited)
                                                                                                                                      
                                                                                                                                                                                      Three Months Ended
                                                                                                                                     --------------------------------------------------------------------------------------------------------------------
                                                                                                                                                April 29, 2017                           April 30, 2016
                                                                                                                                     -------------------------------------                                          -------------------------------------
Cash flows from operating activities:
  Net loss                                                                                                                                 $ (18,987 )                                                                    $ (15,460 )
  Adjustments to reconcile net loss to net cash provided by (used in)
  operating
  activities:
    Depreciation and amortization of long-lived assets                                                                                        16,377                                                                         17,787
                                                                                                                                                (452 )                                                                           53
    Loss (gain) on retirements of property, equipment and leasehold
    improvements
    Deferred income taxes                                                                                                                     (1,117 )                                                                         (697 )
    Tax deficiency from stock-based compensation                                                                                      --                                                                         (2,793 )
    Stock-based compensation expense                                                                                                           2,182                                                                          2,809
    Amortization of debt issuance costs                                                                                                           72                                                                             55
    Deferred compensation obligation                                                                                                              61                                                                             51
    Amortization of employee benefit related costs                                                                                               211                                                                            153
  Construction allowances from landlords                                                                                                         998                                                                          4,341
  Other changes in operating assets and liabilities:
    Increase in merchandise inventories                                                                                                      (33,106 )                                                                      (46,267 )
    Decrease (increase) in other assets                                                                                                       (6,086 )                                                                        4,325
    Increase in accounts payable and other liabilities                                                                                        39,534                                                      43,706  
                                                                                                                                     ------------------------------------                                           ------------------------------------
    Net cash provided by (used in) operating activities                                                                                         (313 )                                                                        8,063  
                                                                                                                                     ------------------------------------                                           ------------------------------------
                                                                                                                                                                                                                     
Cash flows from investing activities:
  Additions to property, equipment and leasehold improvements                                                                                 (7,359 )                                                                      (33,232 )
  Proceeds from insurance and disposal of assets                                                                                               1,223                                                                          1,053
  Business acquisition                                                                                                                       (33,843 )                                                               --  
                                                                                                                                     ------------------------------------                                           ------------------------------------
    Net cash used in investing activities                                                                                                    (39,979 )                                                                      (32,179 )
                                                                                                                                     ------------------------------------                                           ------------------------------------
                                                                                                                                                                                                                     
Cash flows from financing activities:
  Proceeds from revolving credit facility borrowings                                                                                         153,311                                                                        138,876
  Payments of revolving credit facility borrowings                                                                                           (96,559 )                                                                     (107,615 )
  Proceeds from long-term debt obligation                                                                                             --                                                                          5,830
  Payments of long-term debt obligations                                                                                                      (4,083 )                                                                       (2,047 )
  Payments of debt issuance costs                                                                                                                 (8 )                                                               --
  Payments for stock related compensation                                                                                                       (257 )                                                                         (585 )
  Cash dividends paid                                                                                                                         (4,227 )                                                                       (4,106 )
                                                                                                                                     ------------------------------------                                           ------------------------------------
    Net cash provided by financing activities                                                                                                 48,177                                                      30,353  
                                                                                                                                     ------------------------------------                                           ------------------------------------
Net increase in cash and cash equivalents                                                                                                      7,885                                                                          6,237
                                                                                                                                                                                                                     
Cash and cash equivalents:
  Beginning of period                                                                                                                         13,803                                                      16,487  
                                                                                                                                     ------------------------------------                                           ------------------------------------
  End of period                                                                                                                            $  21,688                                                   $  22,724  
                                                                                                                                     ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                     
                                                                      
                                                                                                                      Stage Stores, Inc.
                                                                                                         Reconciliation of Non-GAAP Financial Measures
                                                                                                           (in thousands, except earnings per share)
                                                                                                                          (Unaudited)
                                                                                                                                 
                                                                                                                                                                                      Three Months Ended
                                                                                                                                -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                      April 29, 2017                                           April 30, 2016
                                                                                                                                ----------------------------------------------------------                         --------------------------------------------
Net loss (GAAP)                                                                                                                   $                          (18,987 )                                                 $          (15,460 )
Business acquisition costs (pretax)                                                                                                                            6,275                                                       --
Store closures and other strategic initiatives (pretax)                                                                                                          156                                                                  439
Consolidation of corporate headquarters and severance charges                                                                                         --                                                                  110
associated
with workforce reduction (pretax)
Income tax impact                                                                                                                 $                           (2,447 )                                                 $             (198 )
                                                                                                                                --- -----------------------------------------------------                          ----- -------------------------------------
Adjusted loss (non-GAAP)                                                                                                          $                          (15,003 )                                                 $          (15,109 )
                                                                                                                                === =====================================================                          ===== =====================================
                                                                                                                                                                                                                    
Diluted loss per share (GAAP)                                                                                                     $                            (0.70 )                                                 $            (0.57 )
Business acquisition costs (pretax)                                                                                                                             0.23                                                       --
Store closures and other strategic initiatives (pretax)                                                                                                         0.01                                                                 0.02
Consolidation of corporate headquarters and severance charges                                                                                         --                                                       --
associated
with workforce reduction (pretax)
Income tax impact                                                                                                                                              (0.09 )                                                              (0.01 )
                                                                                                                                ---------------------------------------------------------                          -------------------------------------------
Adjusted diluted loss per share (non-GAAP)                                                                                        $                            (0.55 )                                                 $            (0.56 )
                                                                                                                                === =====================================================                          ===== =====================================
                                                                                                                                 
                                                                                                                                                                                      Three Months Ended
                                                                                                                                -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                      April 29, 2017                                                              April 30, 2016
                                                                                                                                ----------------------------------------------------------                         --------------------------------------------
Selling, general and administrative expenses (GAAP)                                                                               $                           88,509                                                   $           90,144
Business acquisition costs                                                                                                                                    (6,275 )                                                     --
Store closures and other strategic initiatives                                                                                                                  (156 )                                                               (439 )
Consolidation of corporate headquarters and severance charges                                                                                         --                                              (110 )
associated
with workforce reduction
                                                                                                                                ---------------------------------    --------------------                          --------------------   --------------------
Adjusted selling, general and administrative expenses (non-GAAP)                                                                  $                           82,078                                $           89,595  
                                                                                                                                === =====================================================                          ===== =====================================
                                                                                                                                 
                                                                                                                                                                                      2017 Guidance Range
                                                                                                                                -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Low                                                                 High
                                                                                                                                -------------------------------                                                 -----------------------------------------------
Diluted loss per share (GAAP)                                                                                                     $ (1.73 )                                                                      $       (1.13 )
Business acquisition costs, store closures and other strategic                                                                       0.18                                                              0.18  
initiatives
(net of tax)
                                                                                                                                --------  --------------------                                                  ------------   ------------------------------
Adjusted diluted loss per share (non-GAAP)                                                                                        $ (1.55 )                                                                      $       (0.95 )
                                                                                                                                === ===== ====================                                                  == ============================================
                                                                                                                                                                                                                                

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170518005226r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170518005226/en/

SOURCE: Stage Stores, Inc.

Stage Stores, Inc. 
Randi Sonenshein, 713-331-4967 
Senior Vice President, Finance and Strategy 
rsonenshein@stagestores.com


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