Challenging weather conditions have proved more of a challenge for Stage Stores Inc. in the early days of the first quarter than unsettling conditions in the oil market.
Stage, which operates department stores in small and medium-sized markets under brands such as Bealls, Palais Royal, Stage and Goody’s in markets throughout Texas and the Southeast, Tuesday surpassed analysts’ consensus estimates for fourth-quarter earnings but fell short of revenue estimates and expectations for both earnings and sales for 2015.
Michael Glazer, president and chief executive officer of the firm, told analysts on a morning conference call, “Frankly, the weather patterns in February had more of an impact than any oil influence.”
But he expressed concerns that the declines in the crude oil markets could damage the economies of states served by the chain, including Texas, Oklahoma and Louisiana “where we have a significant number of stores.”
“I know there’s been a lot of concern that the job losses as a result of energy, the drop in oil and energy, [but] we just haven’t seen it in our sales.”
He referred to the drop in prices at the pump as being the equivalent of a tax break and said it had led consumers to buy not only more automobiles and iPhones but “also perhaps an extra sweater or hoodie or something from us as well.”
He acknowledged that the possible impact of the oil slowdown had played a role in the company’s conservative guidance for the year, which calls for earnings of 1.20 to $1.28 a diluted share on sales of between $1.64 billion and $1.675 billion, with comparable sales flat to up 2 percent. Prior to the earnings report, analysts on average expected EPS of $1.34 on sales of $1.68 billion in 2015.
Stage doesn’t provide quarterly guidance, but the estimates for the current year helped to pressure the stock down 4.4 percent to $19.80 in trading through 2:30 p.m. Tuesday despite strong bottom-line results for both the fourth quarter and the full year.
In the three months ended Jan. 31, Stage generated net income of $43.7 million, or $1.36 a diluted share, 75.8 percent above the $24.9 million, or 78 cents, recorded during the final quarter of fiscal 2013. The EPS figure was 1 cent above the $1.35 expected, on average, by analysts.
Revenues grew 6.6 percent, to $524.9 million from $492.5 million, and comparable sales increase 6.4 percent.
Glazer noted a solid sales contribution from the expansion of its beauty departments, with the addition of Estée Lauder and Clinique counters in 76 stores over the course of the year, putting them in more than 300 of Stage’s total fleet of 853 units. Excluding cosmetics, inventory per store was down 2 percent versus year-ago levels.
For the full year, net income was up 85.4 percent to $30.9 million, or 96 cents a diluted share, as sales picked up 1.8 percent to $1.64 billion. Comps rose 1.4 percent.