Stage Stores Sees Q1 Loss with 14% Decrease in Comp. Inventory

Stage Stores, Inc. reported a net loss for the first quarter ended May 2, 2009 of $0.9 million, or 2 cents per diluted share, compared to net income of $2.3 million, or 6 cents per diluted share, for the prior year first quarter ended May 3, 2008.

Andy Hall, President and CEO, commented, “As anticipated, the macroeconomic environment remained challenging and our operating results are within the guidance range provided at the beginning of the quarter. We continued with our strong inventory control disciplines and ended the quarter with 14% less comparable store inventory. Also, we reduced first quarter SG&A expenses by $4.7 million versus last year while operating a net 30 additional stores. Our balance sheet strength continues with debt, net of cash, approximately $49 million less than last year.

“We remain focused on what we can control, and we are pleased with the progress we made on our 2009 priorities of new store growth, enhancing our merchandising effectiveness, improving our in-store experience and our north/south realignment,” he continued. “We opened 10 new stores in the first quarter and plan to take advantage of favorable real estate opportunities by opening 13 to 15 additional stores during the remainder of the year. We kicked off the design phase for our markdown optimization tool, which we will pilot this fall. We enhanced our visual merchandising presentations and in-store signing, and remain on track for a fall season roll-out of our new POS software platform. Lastly, we finalized preparations for our north/south realignment. Effective June 1st, 71 southern Peebles stores will be merchandised out of Houston, TX and 12 northern Stage stores will be merchandised out of South Hill, VA. The new divisional structure will result in a true north/south configuration.

“I am also excited that we will be partnering with acclaimed designer David Rodriguez on the exclusive launch of his D.R. by D. Rodriguez brand. The collection, which will be available in 100 stores later this month, will allow our customer to indulge her sense of style with designer fashions at compelling prices,” Hall concluded.

Fiscal 2009 – Second Quarter and Updated Full Year Guidance

Commenting on the company’s guidance, Hall stated, “We do not expect a change in the macroeconomic conditions for the balance of 2009. As such, we are projecting a second quarter comparable store sales decrease of 6.0% to 9.0%. For the fiscal year, we are projecting a comparable store sales decrease of 5.5% to 8.0%. We are tightening the full year EPS guidance range versus the previous range by raising the low end from 35 cents to 40 cents per diluted share, and we are maintaining the high end of the range at 65 cents per diluted share.”

2nd Quarter 2009:
		2Q 2009 OUTLOOK				2Q 2008
Sales ($mm)		$350	–	$360		$372.7
Diluted EPS		$0.20	–	$0.27		$0.25
Diluted Shares (m)		38,550				38,960

FY 2008 results are on a non-GAAP basis and exclude a goodwill impairment charge recorded in the third quarter of $2.49 per share.