Lower sales and margins brought Stage Stores Inc.’s fourth-quarter profits down 20 percent, but the company expects easier comparisons and even retail attrition to help lift its performance in the back half of the current year.

This story first appeared in the March 11, 2009 issue of WWD. Subscribe Today.

For the period ended Jan. 31, the Houston-based operator of the Bealls, Palais Royal, Peebles and Stage department store chains recorded net income of $25.3 million, or 67 cents a diluted share, down from $31.7 million, or 78 cents a share, in the year-ago quarter. Sales dropped 3.6 percent, to $455.8 million from $473 million, and slid 7.2 percent on a same-store basis. Gross margin eased to 29.1 percent of sales from 31 percent.

The earnings per share performance exceeded analysts’ expectations by 1 cent, helping to propel Stage’s shares up $1.10, or 17.9 percent, to close at $7.24 during Wall Street’s rally on Tuesday.

Stage expects first-quarter comps to be down 6 to 9 percent, with full-year comps to be down 5 to 8 percent. In the first quarter, it expects EPS of between a loss of 4 cents and income of 3 cents on revenues between $337 million and $347 million. For 2009, Stage forecast EPS of 35 cents to 65 cents on sales between $1.44 billion and $1.49 billion.

“We believe that comparable-store sales in the second half of the year will benefit from easier comparisons, the anniversary of Hurricane Ike and Goody’s exiting over 90 of our markets,” noted Andy Hall, president and chief executive officer.

The company brought comparable-store inventories down 17 percent during the quarter and increased its year-over-year cash position by $9 million, to $26.3 million. Selling, general and administrative expenses for the quarter were reduced by $3.4 million versus last year.

In 2008, the firm had a net loss of $65.5 million, or $1.71 a share, versus profit of $53.1 million, or $1.24 a share, in 2007. Excluding a goodwill charge, earnings were $29.8 million, or 77 cents a share. Eliminating a charge related to the March 2004 sale of the Peebles credit card portfolio in the prior-year results, adjusted EPS was $1.20 a share. Revenues fell 1.9 percent to $1.52 billion. from $1.55 billion.