Stage Stores, Inc.reported net income of $9.1 million, or 24 cents per diluted share, for the second quarter ended August 1, 2009, compared to net income of $9.7 million, or 25 cents per diluted share, for the prior year second quarter ended August 2, 2008.

Total sales decreased 8.3% to $342 million for the second quarter from $373 million last year. Comparable store sales for the quarter decreased 10.7% versus a decrease of 1.4% in the prior year period.

Andy Hall, president and CEO, commented, “We remain pleased with our ability to control inventories and expenses and deliver earnings that are within the guidance range provided for the quarter. The gross margin rate for the second quarter exceeded last year by 70 basis points. SG&A expenses were reduced by $4.7 million versus last year while operating 24 additional stores.”

Mr. Hall continued, “We opened our first three stores in former Goody’s markets under the Goody’s name on August 6th. We plan to open eleven more Goody’s stores over the next three months, taking advantage of the current economic environment by negotiating very attractive lease rates for these new stores. As the former Goody’s store format is comparable to ours, the net capital investment in these locations is about one half of our typical new store expenditure. In addition to the 2009 openings, we expect to open 30 – 35 stores in former Goody’s markets in future years.

“With regard to our other priorities, we remain on track for a fall pilot of our markdown optimization tool in select merchandise zones and the fall roll-out of our new POS software platform. The markdown optimization tool will benefit sales and gross margin after its company-wide roll-out in 2010. Our north/south store realignment was executed successfully, and the new merchandise assortments for the 83 affected stores will be fully transitioned by the end of September.

“We remain financially sound, with strong operating cash flow, comparable store inventories down 11% and no borrowings on our $250 million credit facility,” Mr. Hall concluded.

Fiscal 2009 – Third Quarter, Fourth Quarter and Updated Full Year Guidance

Commenting on the company’s guidance, Mr. Hall stated, “We expect the macroeconomic conditions to remain challenging during the second half of the year. However, we believe our comparable store sales will benefit from easier comparisons, a more favorable holiday calendar, the anniversary of Hurricane Ike (September 2008) and Goody’s exiting over 100 of our markets. As such, we are projecting a third quarter comparable store sales decrease of 4.0% to 7.0%, and a fourth quarter comparable store sales decrease of 5.0% to 8.0%. For the fiscal year, we are projecting a comparable store sales decrease of 7.0% to 8.5%. We are raising the low end of our EPS guidance range for the fiscal year, and are now projecting $0.47 to $0.65.”


3Q 2008

Sales ($mm) $318 $328 $334
Diluted EPS $(0.29) $(0.21) $(0.19)
Diluted Shares (m) 38,080 38,603

  • 3Q 2008 results are on a non-GAAP basis and exclude a goodwill impairment charge of $95.4 million.

4th Quarter 2009:


4Q 2008

Sales ($mm) $425 $438 $456
Diluted EPS $0.54 $0.65 $0.67
Diluted Shares (m) 38,800 37,994

FY 2009:


FY 2008

Sales ($mm) $1,418 $1,441 $1,516
Diluted EPS $0.47 $0.65 $0.77
Diluted Shares (m) 38,600 38,729




Stage Stores, Inc.
Condensed Consolidated Statements of Income
(in thousands, except earnings per share)
Thirteen Weeks Ended
August 1, 2009 August 2, 2008
Amount % to Sales (1) Amount % to Sales (1)
Net sales $ 341,737 100.0 % $ 372,707 100.0 %

Cost of sales and related buying, occupancy and distribution expenses

241,540 70.7 % 266,149 71.4 %
Gross profit 100,197 29.3 % 106,558 28.6 %
Selling, general and administrative expenses 83,854 24.5 % 88,521 23.8 %
Store opening costs 465 0.1 % 1,231 0.3 %
Interest expense, net of income of $15 and $6, respectively 1,141 0.3 % 1,221 0.3 %
Income before income tax 14,737 4.3 % 15,585 4.2 %
Income tax expense 5,644 1.7 % 5,922 1.6 %
Net income $ 9,093 2.7 % $ 9,663 2.6 %
Basic and diluted earnings per share data:
Basic earnings per share $ 0.24 $ 0.25
Basic weighted average shares outstanding

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