Stage Stores Inc., which has built a 784-door business by focusing on small towns, turned better sales and greater efficiencies into a 14.8 percent gain in fourth-quarter profits.
Shares of the Houston-based firm rose 14.5 percent to $18.37 Tuesday, the strongest performance of the 171 stocks tracked by WWD. The S&P Retail Index gained 0.2 percent, or 1.05 points, to 506.73. The Dow Jones Industrial Average increased 1 percent, or 124.35 points, to 12,214.38, fueled by optimism from the banking sector.
Stage’s net income rose to $32 million, or 86 cents a diluted share, from $27.9 million, or 72 cents, a year earlier. Sales for the three months ended Jan. 29 increased 5.1 percent to $453.7 million from $431.7 million.
Gross margin at the firm, which operates under the Bealls, Goody’s, Palais Royal, Peebles and Stage monikers, expanded to 32.2 percent of sales from 30.9 percent a year earlier and earnings per share beat Wall Street estimates by 1 cent.
Andy Hall, president and chief executive officer, told analysts on a conference call that, in the past, higher gas prices have helped its stores since they tend to be closer to where shoppers live than the competition’s locations. But that benefit wanes as prices keep rising.
“When gas went from $2 a gallon to $3 a gallon, we felt that was a benefit for our business model because with that increase in gas price it gave [the customer] another compelling reason to stay close to home,” Hall said. “A couple years ago when we saw gas go from $3 to $4, that was a hurt for us because the consumer was already staying close to home with gas prices at $3. And then the increase from $3 to $4 was just taking disposable income out of her pocket.”
The average price for a gallon of regular hit $3.52 Tuesday, up from $3.12 a month earlier, according to the American Automobile Association.
For the year, Stage’s earnings rose 31.1 percent to $37.6 million, or 99 cents a diluted share, from $28.7 million, or 75 cents, a year earlier. Sales inched up 2.7 percent to $1.47 billion from $1.43 billion.
For the first quarter, the company projected earnings of 6 to 8 cents a share, opening up some downside to the 8-cent profit analysts were projecting.
• Saks Upgraded: Moody’s Investors Service upgraded Saks Inc.’s corporate family credit rating to “B1” from “B2,” leaving the grade four notches into speculative or “junk” territory.
“The upgrade reflects Saks’ continued growth in operating earnings and Moody’s belief that these improvements are sustainable given the rebound in the luxury goods market,” said Moody’s in its upgrade. “The positive outlook reflects Moody’s view that Saks’ earnings will further improve and that its debt level will likely reduce.”
Shares of Saks rallied $2.32., or 3.9 percent, to $12.31.
Urban Outfitters Inc. saw its shares go in the opposite direction, dropping $6.33, or 16.7 percent, to $31.66 Tuesday following a fourth-quarter earnings report late Monday that included declines in same-store sales and gross margin as well as a profit performance that fell short of analysts’ consensus estimates.