Stage Stores Inc. stock is popping more than 11 percent to $6.39, even though the retailer missed estimates for its second-quarter earnings and sales tumbled.
Net income for the quarter was $410,000 or zero earnings per diluted share, down from $1.6 million, or 5 cents, a year ago. Adjusted earnings per share totaled 3 cents and were 2 cents below the 5 cents that FactSet analysts projected.
Total sales for the three months ended July 30 decreased 11.2 percent to $338.4 million from $380.9 million a year earlier. The FactSet estimate was for sales of $347 million.
Comparable sales dropped 9.8 percent driven by a decline in traffic. Transactions dropped by 17 percent. Average unit retail in the quarter was up 1.3 percent and the units per transactions were up 5.9 percent.
“Our second-quarter results were hurt by a challenging retail environment and continued regional pressure from depressed oil prices and the weak peso. That said, we are pleased with our flat merchandise margins, rigorous expense controls and strong inventory management,” said Michael Glazer, president and chief executive officer.
Glazer said home and cosmetics had the best performance. In the apparel area, denim and activewear showed some signs of strength. Overall though, apparel was described as being tough across the board. The retailer will expand its Vince Camuto Sportswear line and add more Michael Kors categories.
Stage Stores also said that three of its stores had been affected by the flooding in Louisiana and that two stores may not reopen for at least two months. The two stores are completely under water.
Looking ahead, Glazer said he expected that the sales would continue to be pressured due to the oil patch problems and the Mexican Peso. The company did say that the first weekend in August kicked off its back-to-school season in Texas and they are happy with the results. “Good early signs to it, but just want to caution that there’s obviously a lot of business to happen with a lot of school going back closer to Labor Day,” Glazer said.
Stage Stores reaffirmed its fiscal year guidance of comp sales of -6 to -4 percent and adjusted earnings per share in the range of 20 to 40 cents per share.
“While we anticipate the macro headwinds will continue, we expect the impact on our business to lessen as we anniversary the sluggish business that started late in the third quarter of last year,” said Glazer. “We are intensely focused on generating positive cash flow and continue to manage our business for the long term by investing in our stores, growing our omnichannel business, and delivering value to our shareholders through our dividend.”