Stage Stores reported that net income for the first quarter ended May 1, 2004 increased 41.0% to $18.9 million from $13.4 million for the prior year first quarter ended May 3, 2003. Due to the higher number of diluted shares outstanding in this year's first quarter versus last year, earnings per share for the period increased 31.9% to $0.91 per diluted share, as compared to $0.69 per diluted share last year. Total sales for the 13-week period, which include sales for the Peebles stores in the current year's results, increased 46.3% to $289.7 million from $198.0 million last year. Comparable store sales, which include comparable store sales for the Peebles stores in both years, increased 4.5% versus a decrease of 6.8% for the same period last year.
Jim Scarborough, Chairman, President and Chief Executive Officer, commented, “This was a very solid quarter for our company. Our comparable store sales were up a strong 4.5%, and our net income and earnings per share were up significantly, reflecting the improved performance by our Bealls, Palais Royal and Stage group of stores, as well as the accretive impact of our Peebles acquisition. Most of our key merchandise categories achieved comparable store sales increases during the quarter, and our small, mid-size and large market store groups each had positive comparable store sales results.”
Mr. Scarborough continued, “During the first quarter, we opened six new stores, which included four Bealls stores, one Palais Royal store, and one Peebles store. We also completed the remodeling of 5 stores during the period. Additionally, we sold our Peebles private label credit card portfolio to a subsidiary of Alliance Data Systems Corporation, and received cash proceeds of approximately $34.8 million at closing.”
Mr. Scarborough concluded, “Our integration of Peebles continues to go smoothly, and we are pleased with the progress that has been made to date. During the quarter, we launched a Peebles VIP Program and intensified our efforts at our Peebles stores to sign up new credit card accounts. Both initiatives received favorable customer response and, over time, we expect these initiatives to strengthen customer loyalty, grow our credit card penetration rate and increase sales.”
$50 Million Stock Repurchase Program
The Company also reported that, through May 19, 2004, it had repurchased 1,308,956 shares of its common stock under its current $50 million Stock Repurchase Program, at an aggregate purchase price of approximately $47.5 million.
Fiscal 2004 — Second Quarter and Full Year Outlook
Fiscal 2004 — 2nd Quarter:
The Company noted that its second quarter sales and earnings will be negatively affected by the calendar shift in the Texas sales tax holiday weekend from August 1st through August 3rd last year to August 6th through August 8th this year. Last year, the first two days of this event fell in the July and second quarter periods. As a result of the calendar shift, this year all three days of this event will fall in the August and third quarter periods. As compared to last year, the Company estimates that the one week calendar shift in the Texas sales tax holiday weekend, which is a significant sales event for the Company given that close to 44% of its stores are located in Texas, will move approximately $8.0 to $10.0 million in sales revenue from the July and second quarter periods to the August and third quarter periods.
For the second quarter ending July 31, 2004, the Company currently anticipates reporting revenues in the range of $282 to $288 million, which would reflect a comparable store sales decrease from the prior year second quarter in the low single digits range. Were it not for the aforementioned shift in the Texas sales tax holiday weekend, the Company would have expected comparable store sales to be flat to up in the low single digits range. Net income is currently estimated to be in the range of $9.8 to $11.0 million, or earnings of $0.49 to $0.55 per diluted share. This outlook compares to earnings of $9.1 million, or $0.45 per diluted share, for the prior year second quarter. In projecting earnings per share for the fiscal 2004 second quarter, the Company used an estimated diluted share count of 19.9 million shares.
Fiscal 2004 — Full Year:
Updating its outlook for the full 2004 fiscal year ending January 29, 2005 to include actual first quarter results, the Company currently anticipates reporting revenues in the range of $1.23 to $1.25 billion, with the expectation of a comparable store sales increase in the low single digit range. Net income is currently estimated to be in the range of $56.0 to $60.0 million, or earnings of $2.80 to $3.00 per diluted share. This outlook compares to earnings of $55.0 million, or $2.73 per diluted share, for the full 2003 fiscal year, which included a net gain of $7.8 million, or $0.38 per diluted share, related to the sale of the Company's credit card portfolio. In projecting earnings per share for the full 2004 fiscal year, the Company used an estimated diluted share count of 20.0 million shares.
Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
May 1, 2004 May 3, 2003
Amount % to Amount % to
Net sales $289,658 100.0% $197,987 100.0%
Cost of sales and related buying,
occupancy and distribution expenses 192,588 66.5% 135,486 68.4%
Gross profit 97,070 33.5% 62,501 31.6%
Selling, general and administrative
expenses 66,313 22.9% 40,515 20.5%
Store opening costs 314 0.1% 509 0.3%
Interest, net 413 0.1% 397 0.2%
Income before income tax 30,030 10.4% 21,080 10.6%
Income tax expense 11,111 3.8% 7,694 3.9%
Net income $ 18,919 6.5% $ 13,386 6.8%
Basic & Diluted earnings per share data:
Basic earnings per share $ 1.00 $ 0.71
Basic weighted average shares
outstanding 18,925 18,877
Diluted earnings per share $ 0.91 $ 0.69
Diluted weighted average shares
outstanding 20,779 19,527