Stage Stores Earnings 2019-08-03

SSI 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 3, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-14035

Stage Stores, Inc.

(Exact name of registrant as specified in its charter)



Nevada		91-1826900
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2425 West Loop South		77027
Houston,	Texas	(Zip Code)
(Address of principal executive offices)

(800) 579-2302

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	SSI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☐	Accelerated filer	☑

Non-accelerated filer	☐	Smaller reporting company	☑

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of September 4, 2019, there were 28,876,878 shares of the registrant’s common stock outstanding.



TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
			Page No.
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets
		August 3, 2019, February 2, 2019 and August 4, 2018	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss
		Three and Six Months Ended August 3, 2019 and August 4, 2018	5
	Condensed Consolidated Statements of Cash Flows
		Six Months Ended August 3, 2019 and August 4, 2018	6
	Condensed Consolidated Statements of Stockholders’ Equity
		Three and Six Months Ended August 3, 2019 and August 4, 2018	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		30
Item 4.	Controls and Procedures		30

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3.	Defaults Upon Senior Securities		33
Item 4.	Mine Safety Disclosures		33
Item 5.	Other Information		33
Item 6.	Exhibits		33

SIGNATURES			34

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Stage Stores, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)




	August 3, 2019			February 2, 2019			August 4, 2018
ASSETS
Cash and cash equivalents	$	25,418		$	15,830		$	26,573
Merchandise inventories, net	499,001			424,555			476,883
Prepaid expenses and other current assets	50,138			52,518			48,525
Total current assets	574,557			492,903			551,981

Property, equipment and leasehold improvements, net of accumulated depreciation of $757,296, $733,366 and $722,938, respectively	201,928			224,803			236,151
Operating lease assets	321,982			—			—
Intangible assets	2,225			2,225			17,135
Other non-current assets, net	21,354			24,230			24,409
Total assets	$	1,122,046		$	744,161		$	829,676

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	155,865		$	106,825		$	122,680
Current portion of debt obligations	5,000			4,812			3,542
Current portion of operating lease liabilities	74,906			—			—
Accrued expenses and other current liabilities	76,455			65,715			73,506
Total current liabilities	312,226			177,352			199,728

Long-term debt obligations	318,775			250,294			268,682
Long-term operating lease liabilities	279,009			—			—
Other long-term liabilities	32,213			61,990			65,431
Total liabilities	942,223			489,636			533,841

Commitments and contingencies

Common stock, par value $0.01, 100,000 shares authorized, 34,052, 33,469 and 33,418 shares issued, respectively	341			335			334
Additional paid-in capital	425,033			423,535			421,621
Treasury stock, at cost, 5,175 shares, respectively	(43,546		)	(43,579		)	(43,388		)
Accumulated other comprehensive loss	(5,485		)	(5,857		)	(4,823		)
Accumulated deficit	(196,520		)	(119,909		)	(77,909		)
Total stockholders' equity	179,823			254,525			295,835
Total liabilities and stockholders' equity	$	1,122,046		$	744,161		$	829,676

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Stage Stores, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(Unaudited)



	Three Months Ended						Six Months Ended
	August 3, 2019			August 4, 2018			August 3, 2019			August 4, 2018
Net sales	$	367,865		$	369,294		$	695,586		$	713,523
Credit income	13,988			14,305			27,096			29,819
Total revenues	381,853			383,599			722,682			743,342
Cost of sales and related buying, occupancy and distribution expenses	295,204			286,807			572,803			568,548
Selling, general and administrative expenses	106,310			110,914			212,886			218,191
Interest expense	4,123			2,650			8,117			4,903
Loss before income tax	(23,784		)	(16,772		)	(71,124		)	(48,300		)
Income tax expense	150			150			300			300
Net loss	$	(23,934	)	$	(16,922	)	$	(71,424	)	$	(48,600	)

Other comprehensive income:
Amortization of employee benefit related costs, net of tax of $0, respectively	$	202		$	155		$	372		$	354
Total other comprehensive income	202			155			372			354
Comprehensive loss	$	(23,732	)	$	(16,767	)	$	(71,052	)	$	(48,246	)

Net loss per share:
Basic	$	(0.83	)	$	(0.60	)	$	(2.50	)	$	(1.74	)
Diluted	$	(0.83	)	$	(0.60	)	$	(2.50	)	$	(1.74	)

Weighted average shares outstanding:
Basic	28,791			28,152			28,616			27,959
Diluted	28,791			28,152			28,616			27,959

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Stage Stores, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)



	Six Months Ended
	August 3, 2019			August 4, 2018
Cash flows from operating activities:
Net loss	$	(71,424	)	$	(48,600	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of long-lived assets	29,872			30,147
Impairment of long-lived assets	1,615			1,070
(Gain) loss on retirements of property, equipment and leasehold improvements	(678		)	17
Non-cash operating lease expense	34,919			—
Stock-based compensation expense	1,585			3,049
Dividends charged to compensation expense	21			—
Amortization of debt issuance costs	341			148
Deferred compensation obligation	(33		)	90
Amortization of employee benefit related costs	372			354
Construction allowances from landlords	3,553			757
Other changes in operating assets and liabilities:
Increase in merchandise inventories	(74,446		)	(38,506		)
Decrease in other assets	8,464			2,412
Decrease in operating lease liabilities	(37,601		)	—
Increase (decrease) in accounts payable and other liabilities	61,788			(19,958		)
Net cash used in operating activities	(41,652		)	(69,020		)

Cash flows from investing activities:
Additions to property, equipment and leasehold improvements	(18,610		)	(12,822		)
Proceeds from insurance and disposal of assets	678			1,802
Net cash used in investing activities	(17,932		)	(11,020		)

Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	257,426			298,509
Payments of revolving credit facility borrowings	(186,445		)	(233,148		)
Proceeds from long-term debt obligation	—			25,000
Payments of long-term debt obligations	(1,758		)	(1,472		)
Payments of debt issuance costs	(36		)	(354		)
Payments for stock related compensation	(15		)	(260		)
Cash dividends paid	—			(2,912		)
Net cash provided by financing activities	69,172			85,363
Net increase in cash and cash equivalents	9,588			5,323

Cash and cash equivalents:
Beginning of period	15,830			21,250
End of period	$	25,418		$	26,573

Supplemental disclosures including non-cash investing and financing activities:
Interest paid	$	7,726		$	4,866
Income taxes paid	$	473		$	14
Unpaid liabilities for capital expenditures	$	4,166		$	4,798

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Stage Stores, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except per share amounts)

(Unaudited)



	Common Stock			Additional Paid-in Capital			Treasury Stock					Accumulated Other Comprehensive Loss			Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at May 4, 2019	33,805	$	338	$	424,407		(5,175	)	$	(43,552	)	$	(5,687	)	$	(172,607	)	$	202,899
Net loss	—	—		—			—		—			—			(23,934		)	(23,934		)
Other comprehensive income	—	—		—			—		—			202			—			202
Deferred compensation	—	—		(6		)	—		6			—			—			—
Issuance of equity awards, net	247	3		(3		)	—		—			—			—			—
Tax withholdings paid for net settlement of stock awards	—	—		(1		)	—		—			—			—			(1		)
Stock-based compensation expense	—	—		636			—		—			—			—			636
Dividends on forfeited stock awards charged to compensation expense	—	—		—			—		—			—			21			21
Balance at August 3, 2019	34,052	$	341	$	425,033		(5,175	)	$	(43,546	)	$	(5,485	)	$	(196,520	)	$	179,823


	Common Stock			Additional Paid-in Capital			Treasury Stock					Accumulated Other Comprehensive Loss			Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at May 5, 2018	33,111	331		420,091			(5,175	)	(43,339		)	(4,978		)	(59,520		)	312,585
Net loss	—	—		—			—		—			—			(16,922		)	(16,922		)
Other comprehensive income	—	—		—			—		—			155			—			155
Dividends on common stock, $0.05 per share	—	—		—			—		—			—			(1,467		)	(1,467		)
Deferred compensation	—	—		49			—		(49		)	—			—			—
Issuance of equity awards, net	307	3		(3		)	—		—			—			—			—
Tax withholdings paid for net settlement of stock awards	—	—		(7		)	—		—			—			—			(7		)
Stock-based compensation expense	—	—		1,491			—		—			—			—			1,491
Balance at August 4, 2018	33,418	$	334	$	421,621		(5,175	)	$	(43,388	)	$	(4,823	)	$	(77,909	)	$	295,835

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Stage Stores, Inc.

Condensed Consolidated Statements of Stockholders’ Equity - continued

(in thousands, except per share amounts)

(Unaudited)



	Common Stock			Additional Paid-in Capital			Treasury Stock					Accumulated Other Comprehensive Loss			Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at February 2, 2019	33,469	$	335	$	423,535		(5,175	)	$	(43,579	)	$	(5,857	)	$	(119,909	)	$	254,525
Cumulative-effect adjustment ^(a)	—	—		—			—		—			—			(5,208		)	(5,208		)
Net loss	—	—		—			—		—			—			(71,424		)	(71,424		)
Other comprehensive income	—	—		—			—		—			372			—			372
Deferred compensation	—	—		(33		)	—		33			—			—			—
Issuance of equity awards, net	583	6		(6		)	—		—			—			—			—
Tax withholdings paid for net settlement of stock awards	—	—		(48		)	—		—			—			—			(48		)
Stock-based compensation expense	—	—		1,585			—		—			—			—			1,585
Dividends on forfeited stock awards charged to compensation expense	—	—		—			—		—			—			21			21
Balance at August 3, 2019	34,052	$	341	$	425,033		(5,175	)	$	(43,546	)	$	(5,485	)	$	(196,520	)	$	179,823

^(a) Related to the adoption of the new lease accounting standard. See Note 1 for further disclosures regarding the adoption impact.

	Common Stock			Additional Paid-in Capital			Treasury Stock					Accumulated Other Comprehensive Loss			Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at February 3, 2018	32,806	$	328	$	418,658		(5,175	)	$	(43,298	)	$	(5,177	)	$	(26,397	)	$	344,114
Net loss	—	—		—			—		—			—			(48,600		)	(48,600		)
Other comprehensive income	—	—		—			—		—			354			—			354
Dividends on common stock, $0.10 per share	—	—		—			—		—			—			(2,912		)	(2,912		)
Deferred compensation	—	—		90			—		(90		)	—			—			—
Issuance of equity awards, net	612	6		(6		)	—		—			—			—			—
Tax withholdings paid for net settlement of stock awards	—	—		(170		)	—		—			—			—			(170		)
Stock-based compensation expense	—	—		3,049			—		—			—			—			3,049
Balance at August 4, 2018	33,418	$	334	$	421,621		(5,175	)	$	(43,388	)	$	(4,823	)	$	(77,909	)	$	295,835

Stage Stores, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of Stage Stores, Inc. and its subsidiary (“we,” “us” or “our”) have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. Those adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods have been made. Results of operations for such interim periods are not necessarily indicative of the results of operations for a full year due to seasonality and other factors. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto filed with our Annual Report on Form 10-K for the year ended February 2, 2019 (“Form 10-K”).

We are a retailer of trend-right, moderately priced, name-brand apparel, accessories, cosmetics, footwear and home goods. As of August 3, 2019, we operated in 42 states through 645 BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE specialty department stores and 141 GORDMANS off-price stores, as well as an e-commerce website (www.stage.com). Our department stores are predominantly located in small towns and rural communities. Our off-price stores are predominantly located in smaller and mid-sized markets in the Midwest.

References to a particular year are to our fiscal year, which is the 52- or 53-week period ending on the Saturday closest to January 31st of the following calendar year. For example, a reference to “2019” is a reference to the fiscal year ending February 1, 2020, and “2018” is a reference to the fiscal year ended February 2, 2019. Fiscal years 2019 and 2018 are comprised of 52 weeks. References to the “three months ended August 3, 2019” and “three months ended August 4, 2018” are for the respective 13-week fiscal quarters. References to quarters relate to our fiscal quarters. References to the “six months ended August 3, 2019” and “six months ended August 4, 2018” are for the respective 26-week fiscal periods.

Recently Adopted Accounting Pronouncements. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (“ASU”) 2016-02, Leases (Topic 842), and subsequently issued related ASUs, which were incorporated into Topic 842. Under the new standard, lessees are required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the later of the lease commencement date and the date of adoption. The guidance also requires qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. We adopted the new standard on February 3, 2019, the first day of fiscal 2019.

Transition elections:


•	We elected to apply the effective date transition method as of the February 3, 2019 adoption date. Comparative periods prior to the adoption of the new standard have not been restated and are reported under the legacy guidance in Accounting Standards Codification (“ASC”) Topic 840, Leases.


•	We elected the package of practical expedients in the transition guidance, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.


•	We elected not to use the practical expedient of using hindsight to determine the lease term and in assessing impairment of the right-of-use assets.

Accounting policy elections:


•	We elected the short-term lease exemption for leases that have a lease term of twelve months or less. For leases that qualify for the short-term exemption, we will not recognize a right-of-use asset or liability and will recognize those lease expenses on a straight-line basis over the lease term.


•	We elected to not separate lease and non-lease components for all of our current lease classes.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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The adoption of the standard resulted in the recognition of operating lease assets and liabilities of $344.2 million and $375.8 million, respectively, as of February 3, 2019. Included in the measurement of the operating lease assets and liabilities is the reclassification of balances historically recorded as deferred rent and deferred rent tenant allowances. We also recognized a cumulative effect charge of $5.2 million, net of tax, to the opening accumulated deficit balance. This adjustment reflects $5.8 million in depreciation of leasehold improvements associated with conforming the asset useful life to the remaining lease life as of the transition date. It also reflects $0.6 million associated with the derecognition of lease obligations that had been classified as finance obligations under the former failed sale-leaseback guidance applied to build-to-suit arrangements. Under the new standard, these leases are classified as operating leases. The adoption of the standard did not have a material impact on our results of operations or cash flows. In addition, our bank covenants under our Credit Facility were not affected by the adoption of the standard. See Note 5 for further disclosures regarding leases.

Recent Accounting Pronouncements Not Yet Adopted. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The new standard will be effective for us in the first quarter of fiscal 2020, with early adoption permitted. We are currently evaluating the impact of the new guidance on our disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which aligns the requirements for capitalizing implementation costs in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires disclosure of the nature of hosting arrangements that are service contracts. The new standard will be effective for us in the first quarter of fiscal 2020, with early adoption permitted. We are currently evaluating the impact of the new guidance on our financial statements and disclosures.

NOTE 2 - FAIR VALUE MEASUREMENTS

We recognize or disclose the fair value of our financial and non-financial assets and liabilities on a recurring and non-recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we assume the highest and best use of the asset by market participants in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability.

We applied the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:



Level 1 –	Quoted prices in active markets for identical assets or liabilities.

Level 2 –	Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 –	Inputs that are both unobservable and significant to the overall fair value measurement reflect our estimates of assumptions that market participants would use in pricing the asset or liability.

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Financial assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):



	August 3, 2019
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other assets:
Securities held in grantor trust for deferred compensation plans ^(a)(b)	$	16,763	$	16,763	$	—	$	—


	February 2, 2019
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other assets:
Securities held in grantor trust for deferred compensation plans ^(a)(b)	$	19,536	$	19,536	$	—	$	—


	August 4, 2018
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other assets:
Securities held in grantor trust for deferred compensation plans ^(a)(b)	$	20,188	$	20,188	$	—	$	—

^(a) The liability for the amount due to participants corresponding in value to the securities held in the grantor trust is recorded in other long-term liabilities.

^(b) Using the market approach, the fair values of these securities represent quoted market prices multiplied by the quantities held. Net gains and losses related to the changes in fair value in the assets and liabilities under the various deferred compensation plans are recorded in selling, general and administrative expenses and were nil for the six months ended August 3, 2019 and August 4, 2018, and for the fiscal year ended February 2, 2019.

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Non-financial assets measured at fair value on a nonrecurring basis were as follows (in thousands):



	August 3, 2019
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Assets held for sale ^(a)	$	2,799	$	—	$	—	$	2,799
Operating lease assets ^(b)	4,585		—		—		4,585
Store property, equipment and leasehold improvements ^(b)	629		—		—		629
Total Assets	$	8,013	$	—	$	—	$	8,013


	February 2, 2019
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Store property, equipment and leasehold improvements ^(a)	$	1,583	$	—	$	—	$	1,583


	August 4, 2018
	Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Store property, equipment and leasehold improvements ^(a)	$	1,101	$	—	$	—	$	1,101

^(a)Assets held for sale are recorded at the asset’s fair value less estimated costs to sell and are reflected in prepaid expenses and other current assets. For the six months ended August 3, 2019, we recognized impairment charges of $1.0 million based on a third party valuation of the underlying assets. These impairment charges are recorded in selling, general and administrative expenses.

^(b)Using an undiscounted cash flow model, we evaluate the cash flow trends of our stores at least annually and when events or changes in circumstances, such as a store closure, indicate that the asset group may not be fully recoverable. When a store’s projected undiscounted cash flows indicate its asset carrying value may not be recoverable, we use a discounted cash flow model to estimate the fair value of the underlying asset group. An impairment write-down is recorded if the carrying value of an asset exceeds its fair value. Key assumptions in estimating future cash flows include, among other things, expected future operating performance, including expected closure date and lease term, and changes in economic conditions. We believe estimated future cash flows are sufficient to support the carrying value of our right-of-use operating lease and long-lived assets. Significant changes in the key assumptions used in our cash flow projections may result in additional asset impairments. For the six months ended August 3, 2019 and August 4, 2018 and during fiscal year 2018, we recognized impairment charges of $0.6 million, $1.1 million, and $2.8 million, respectively. Impairment charges related to store property, equipment and leasehold improvements are recorded in cost of sales and related buying, occupancy and distribution expenses.

Due to the short-term nature of cash and cash equivalents, payables and short-term debt obligations, the carrying value approximates the fair value of these instruments. In addition, we believe that the credit facility obligation approximates its fair value because interest rates are adjusted daily based on current market rates.

Table of Contents

NOTE 3 - DEBT OBLIGATIONS

Debt obligations for each period presented consisted of the following (in thousands):



	August 3, 2019		February 2, 2019		August 4, 2018
Revolving loan	$	275,025	$	204,044	$	244,649
Term loan	48,750		50,000		25,000
Finance obligations	—		554		1,064
Other financing	—		508		1,511
Total debt obligations	323,775		255,106		272,224
Less: Current portion of debt obligations	5,000		4,812		3,542

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.76	29	$22

10-Q	2019-08-03	Quarter: 2019-08-03
10-Q	2019-05-04	Quarter: 2019-05-04
10-K	2019-02-02	Annual: 2019-02-02
10-Q	2018-11-03	Quarter: 2018-11-03
10-Q	2018-08-04	Quarter: 2018-08-04
10-Q	2018-05-05	Quarter: 2018-05-05
10-K	2018-02-03	Annual: 2018-02-03
10-Q	2017-10-28	Quarter: 2017-10-28
10-Q	2017-07-29	Quarter: 2017-07-29
10-Q	2017-04-29	Quarter: 2017-04-29
10-K	2017-01-28	Annual: 2017-01-28
10-Q	2016-10-29	Quarter: 2016-10-29
10-Q	2016-07-30	Quarter: 2016-07-30
10-Q	2016-04-30	Quarter: 2016-04-30
10-K	2016-01-30	Annual: 2016-01-30
10-Q	2015-10-31	Quarter: 2015-10-31
10-Q	2015-08-01	Quarter: 2015-08-01
10-Q	2015-05-02	Quarter: 2015-05-02
10-K	2015-01-31	Annual: 2015-01-31
10-Q	2014-11-01	Quarter: 2014-11-01
10-Q	2014-08-02	Quarter: 2014-08-02
10-Q	2014-05-03	Quarter: 2014-05-03
10-K	2014-02-01	Annual: 2014-02-01

8-K	2019-11-07	Other Events, Exhibits
8-K	2019-10-03	Other Events, Exhibits
8-K	2019-09-25	Regulation FD, Exhibits
8-K	2019-09-17	Other Events, Exhibits
8-K	2019-08-22	Earnings, Exhibits
8-K	2019-08-08	Other Events, Exhibits
8-K	2019-07-29	Officers
8-K	2019-07-23	Other Events, Exhibits
8-K	2019-06-24	Officers
8-K	2019-06-20	Regulation FD, Exhibits
8-K	2019-05-31	Officers, Shareholder Vote
8-K	2019-05-23	Earnings, Exhibits
8-K	2019-05-09	Other Events, Exhibits
8-K	2019-04-04	Other Events, Exhibits
8-K	2019-03-28	Other Events, Exhibits
8-K	2019-03-07	Earnings, Exhibits
8-K	2019-02-21	Other Events, Exhibits
8-K	2019-02-04	Enter Agreement, Officers, Other Events, Exhibits
8-K	2019-01-28	Regulation FD, Exhibits
8-K	2019-01-14	Other Events, Exhibits
8-K	2019-01-11	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-01-02	Other Events, Exhibits
8-K	2018-11-20	Earnings, Other Events, Exhibits
8-K	2018-11-08	Other Events, Exhibits
8-K	2018-09-04	Officers, Exhibits
8-K	2018-08-09	Other Events, Exhibits
8-K	2018-08-08	Officers, Exhibits
8-K	2018-08-08	Officers
8-K	2018-08-03	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-06-07	Shareholder Vote
8-K	2018-06-06	Other Events, Exhibits
8-K	2018-05-10	Other Events, Exhibits
8-K	2018-03-19	Officers, Exhibits
8-K	2018-03-08	Earnings, Exhibits
8-K	2018-02-22	Other Events, Exhibits
8-K	2018-01-08	Other Events, Exhibits
8-K	2018-01-02	Other Events, Exhibits

URBN	Urban Outfitters	2,296
DSW	DSW	2,114
PLCE	Children's Place	1,370
GCO	Genesco	590
LE	Lands' End	257
TLRD	Tailored Brands	257
TLYS	Tilly's	249
ASNA	Ascena Retail Group	55
SMRT	Stein Mart	34
DEST	Destination Maternity	10

EX-10.1	ex101q22019.htm
EX-31.1	ex311q22019.htm
EX-31.2	ex312q22019.htm
EX-32	ex32q22019.htm