Stage Stores' September Comps Dip

Stage Stores Inc. (SSI - Snapshot Report) reported total sales of $118.0 million for September 2011, flat year over year. The company’s comparable store sales (comps) declined 0.7% versus a gain of 1.8% recorded in the same month a year ago.

After recording modest increases in two consecutive quarters, comps have been declining since August. We believe the ongoing economic turmoil has taken a toll on consumer sentiment yet again.

Stage Stores’ year-to-date total revenue was up 1.4% year over year at $930.0 million while comps grew 0.1% as against a decline of 0.6% in the corresponding period last year. In the second quarter, the company’s total sales increased 2.3% year over year to $353.0 million attributable to a 0.9% upside in comps.

In September, the categories that performed well in terms of comps were cosmetics, home & gifts and junior’s merchandise division. Geographically, the Southeast and Midwest regions recorded comparable store sales gains during the month. Pick-up in the back-to-school shopping season helped the monthly comps to some extent.   

The company also remains committed to enhance shareholder value, having repurchased $2.3 million worth common stock during August and September for $34.1 million. At the end of September, the company met its repurchase goal for 2011 with a payout of a total of $100 million on the current Stock Repurchase Program.

Stage Stores, which houses nationally branded apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns, ended the September quarter with 805 retail outlets in 40 states. During September, the company opened five new Goody’s stores and one new Bealls store as well as reopened a fire-damaged store.

Last month, the company completed the re-branding of Goody’s locations which are likely to fetch strong sales. Management expects to end this year with roughly 820 stores among which 21–22 will be new.

The Zacks Consensus Estimates for the third quarter and fiscal 2011 are pegged at 24 cents loss per share and $1.11 of earnings, respectively. Management expects comps to be up 1–3% for the third quarter of 2011. Management also commented that the money spent and lower share count from the share buyback will have an adverse effect of 2 cents on the third quarter’s loss per share.

Stage Store currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Cache Inc. (CACH - Snapshot Report) currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

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