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Stage Stores, Inc. (SSI)
F2Q08 Earnings Call
August 21, 2008 8:30 am ET
Bob Aronson - Vice President, Investor Relations
James R. Scarborough - Chairman, Chief Executive Officer
Andrew T. Hall - President, Chief Operating Officer, Director
Edward J. Record - Chief Financial Officer, Executive Vice President
Jeff Blaeser - Morgan Joseph & Co., Inc.
David Mann - Johnson Rice & Company
[David Berman - Berman Capital]
David Glick - Buckingham Research Group
Robert Drbul - Lehman Brothers
Previous Statements by SSI
» Stage Stores, Inc. Q2 2009 (Qtr End 08/01/09) Earnings Call Transcript
» Stage Stores, Inc. F4Q08 (Qtr End 1/31/09) Earnings Call Transcript
» Stage Stores, Inc. F3Q08 (Qtr End 11/01/08) Earnings Call Transcript
Speaking this morning from the company will be Jim Scarborough, Chairman and Chief Executive Officer, Andy Hall, President and Chief Operating Officer, and Ed Record, Executive Vice President and Chief Financial Officer.
Before they begin I would like to point out that any reference to earnings per share during this morning’s call will be a reference to diluted earnings per share. I would also like to point out that our comments this morning do contain forward-looking statements. Forward-looking statements reflect our expectations regarding future events and operating performance and often contain words such as believe, expect, may, will, should, could, anticipate, plan or similar words. Our forward-looking statements include comments regarding the number of new stores that we plan to open in the 2008 fiscal year as well as comments regarding our sales, gross margin, SG&A expenses, and earnings outlooks for the third and fourth quarters of the 2008 fiscal year and full 2008 fiscal year. Our forward-looking statements also include comments regarding the number of Este Lauder and Clinique counters that we expect to open during the last half of the year. Such forward-looking statements are subject to a number of risks and uncertainties which could cause our actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include but are not limited those described in our most recent annual report on Form 10K as filed with the Securities and Exchange Commission and other factors that may periodically be described in other company filings with the SEC.
With that said I would like to turn the call over to Jim.
James R. Scarborough
We appreciate you joining us this morning for our second quarter conference call. I’ll start off today’s call by spending a few minutes providing you with a high level overview of our Q2 results. Then Andy will follow me with a review of our operational highlights for the quarter. Once Andy is finished with his remarks, Ed will discuss our second quarter financial results with you in greater detail and he’ll also cover our Q3, Q4 and full-year sales and earnings outlooks. Then after Ed has concluded we’ll open it up for questions.
Although general economic conditions remained challenging during the second quarter, we were nonetheless pleased to see some relative strengthening in our business versus our first quarter trends. Based on our first quarter comp store sales decline of 5.4% we had projected comp store sales declines for the second quarter of between 3% and 5%.
However, as a result of our having positive comp store sales results in May and June our overall comps for Q2 were down only 1.4%. And while we’ve never been known to give ourselves pats on the back for negative comp store sales, given the current mentality of the consumer we were nevertheless pleased to have exceeded our sales forecast for the quarter. We believe that the drivers for our better-than-expected sales results for the second quarter were relatively favorable weather conditions throughout the period, successful sales events for Mothers Day, Fathers Day and Memorial Day and the beneficial impact from the tax rebate checks.
So with our sales coming in above the high end of our guidance range and due to our inventory and expense levels being tightly managed throughout the quarter, we were able to flow incremental dollars to the bottom line and we produced EPS that exceeded the high end of our guidance range and beat last year’s EPS results by $0.02 per share. As a result of our prudent inventory management practices, we ended the quarter very clean with our retail inventories down 8.9% versus last year on a comp store basis. Overall our inventories totaled $349.6 million this year versus $344.9 million last year reflective of the fact that we had 51 more stores in operation at the end of this year’s second quarter.
In addition to improving our EPS during the quarter we’re also pleased with the progress that was made during the quarter on a number of our key strategic and operating initiatives which Andy will discuss in great detail with you shortly.
Although we experienced some relative strengthening of our business during the second quarter, as we look ahead we still believe that the macroeconomic environment will continue to be difficult during the last half of this year. Accordingly, we are forecasting that our comp store sales will be down between 1% and 3% during the final two quarters of the year and we have planned our inventory and expense levels accordingly.
Just before I turn the call over to Andy, I want to wrap up and leave you with the following thoughts by saying that despite today’s challenging national economic environment, all of us here at Stage Stores remain intensely committed to growing and investing in our business. We are blessed with a solid balance sheet, strong cash flows, and ample liquidity which gives us the financial flexibility to move forward with our strategic growth plans. We believe that our focus and our investment in continuing to grow our store base and our geographic presence even during these current economic times position us to prosper especially once our economy starts to improve.