Stage Stores, Inc. reported that its total sales for the five week September period ended Oct. 4 decreased 9.6% to $115.5 million from $127.8 million in the prior year five week period. Comparable store sales decreased 13.6% versus an increase of 2.3% last year.
“September was an extremely challenging month, as hurricanes Gustav and Ike caused significant disruptions to our business,” said Jim Scarborough, chairman and CEO . “With 53 stores closed during Hurricane Gustav and 121 stores closed during Hurricane Ike, we estimate that these two storms resulted in lost sales of approximately $9.1 million, of which $8.4 million was lost in September. Adjusting for the estimated lost sales, our comparable store sales for September were down 7.7%.”
The company noted that all but 4 of the stores that were closed during Hurricanes Gustav and Ike have reopened. Three of the remaining closed stores, which are located in Liberty, Orange and Houston, Texas, will reopen in November, 2008, and the Galveston, Texas store is expected to reopen in the Spring of 2009.
“I want to personally thank all of our dedicated associates for doing an outstanding job in the face of very challenging conditions,” Scarborough said. “Some of our associates lost their homes and all of their possessions, and many of them, like a lot of our customers, had no electricity for weeks following Hurricane Ike. Their dedication and hard work enabled us to reopen our stores as quickly as possible.
“With our comparable store sales down 11.0% after the first two months of the quarter, and taking into consideration all of the recent national economic turbulence and the headwinds facing consumers, we now estimate that our third quarter comparable store sales will be down high single to low double digits versus our original guidance of down 1% to 3%. As a result of the anticipated sales shortfall and the increased pressure on our gross margin to drive sales, we expect third quarter earnings to significantly miss the low end of our original earnings guidance of a loss of $0.01 to a profit of $0.05 per diluted share. Also, in light of the current economic environment and its impact on our market value, we will undertake a review of the carrying value of our goodwill. This review may result in a third quarter non-cash impairment charge,” Scarborough concluded.