Stage Stores Inc. reported a loss after impairment charges in the first quarter while same-store sales dipped 3.1 percent. The department store operator reaffirmed guidance for fiscal year 2019.

“Our key growth strategies of off-price conversions and department store home growth contributed to flat comparable sales for the combined March and April period, following a double-digit decline in February,” commented Michael Glazer, Chief Executive Officer. “First quarter results included more than 500 basis points of comparable sales benefit from off-price conversions and home expansions, and a $25 million improvement in cash flow compared to 2018. That said, our first quarter results were impacted by a weak performance in women’s sportswear and by expected interruptions and up-front investments associated with the implementation of our strategies. These disruptions included temporary store closings in preparation for off-price conversion, and changing department store layouts in conjunction with expanding the home assortment. We continue to be thrilled with the results of our 46 off-price conversion stores, including the 37 stores completed in March 2019. Notably, sales in the small mid-west market stores, which make up the majority of our off-price conversions, more than doubled in the first quarter versus the prior year sales. Additionally, our home expansion strategy was fully rolled out to department stores by the end of March and performance exceeded our expectations.”

Glazer continued, “We are very pleased with the results of our strategy to pivot from a department store that was overly dependent on apparel to a retailer that provides our guests with greater value, a broader assortment of merchandise categories, and the shopping experience that she is seeking. With the significant disruptions of the first quarter behind us, we expect the momentum to build as more department stores are converted to off-price and the importance of the home and gift category increases in the holiday season. Thus, we remain confident that our strategies for long-term growth will contribute meaningfully to our fiscal 2019 results, and we expect to meet our guidance and deliver positive cash flow for the year. We are reaffirming our annual guidance range of +3 percent to +5 percent comparable sales, which includes approximately 85 off-price conversions, and $10 million to $15 million of EBITDA adjusted for impairments.”

First Quarter Results

First quarter 2019 results compared to first quarter 2018 results were as follows:

  • Net sales were $328 million compared to $344 million
  • Comparable sales decreased 3.1 percent for total company, with off-price conversions benefiting comp by 240 basis points
  • Net loss was $47.5 million compared to net loss of $31.7 million
  • Loss per share was $1.67 compared to loss per share of $1.14
  • EBITDA adjusted for impairments was a loss of $27.5 million compared to a loss of $14.1 million

2019 Guidance

For 2019, the company reaffirmed the following annual guidance:

  • Net sales between $1,590 million and $1,620 million
  • Comparable sales increase of 3 percent to 5 percent
  • EBITDA adjusted for impairments between $10 million and $15 million
  • Net loss between $65 million and $60 million, and tax rate of 0 percent
  • Loss per share between $2.25 and $2.10
  • Convert approximately 85 department stores to Gordmans off-price stores, and close 40 to 60 department stores
  • Capital expenditures of $30 million to $35 million