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March Comps Improve at Stage Stores

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Stage Stores Inc. reported total sales of $144.0 million for March 2012, up 7.5% year over year. The company’s comparable store sales (comps) increased 4.7% versus a decline of 5.3% recorded in the same month a year ago.

Stage Stores’ total revenue for February and March was up 7.5% year over year at $245.0 million while comps grew 4.3% as against a decline of 6.1% in the corresponding period last year. In the fourth quarter of 2012, the company’s total sales increased 5.6% year over year to $479.1 million attributable to a 1.3% upside in comps.

In March, the categories that performed well in terms of comps were accessories, children’s, cosmetics, dresses, footwear, home & gifts, junior’s, misses sportswear and petites segments. Geographically, the Mid Atlantic, Midwest, Northeast, South Central and Southwest regions recorded comparable store sales gains during the month. Comfortable winter in March as well as the shift of Easter to early April compared to late April last year helped the monthly comps to a great extent.

However, while the earlier Easter transition assisted comps in March, it will likely have an adverse impact on April comps. Additionally, management remains cautious about the shift of Mother’s Day to May this year from April 2011, which is also likely to hamper April sales. Here is not end. Management stated that the company’s first quarter sales will likely be challenged due to the transfer of a promotional event that took place in April 2011 but is slated for May this year.  This will move 1% of quarterly sales to May 2012 compared to last year.

Stage Stores, which houses nationally branded apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns, ended March with 823 retail outlets in 40 states. During the reported month, the company opened one Goody’s store and six new Steele’s stores.

The Zacks Consensus Estimates for the first quarter and fiscal 2012 are pegged at 3 cents loss per share and $1.11 of earnings, respectively. Management expects comps to be flat to up 2% for 2012.  

Stage Store currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, Cache Inc. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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