Shares of Stage Stores Inc. dropped 21.4 percent to $7 in early trading today after the retailer revealed a sharp decrease in fourth-quarter profits and a weaker-than-expected outlook.

Net income dropped by 52 percent for the fourth quarter to $21 million, or 71 cents a diluted share, from $43.7 million, or $1.36, a year earlier. Adjusted earnings per share of 91 cents came in below the $1.06 analysts projected.

Sales for the three months ended Jan 30 fell 4.3 percent to $502.6 million from $524.9 million as comparable sales slipped 3.4 percent.

“Our holiday results were pressured by low oil prices, the devalued peso and record warm temperatures,” said Michael Glazer, president and chief executive officer. “Stores in the oil patch and along the Mexican border account for more than 40 percent of our sales, and the economic uncertainty in those areas negatively impacted our comp sales by 240 basis points during the fourth quarter. In light of these challenges and resulting soft traffic, we responded with higher-than-planned markdowns that enabled us to reduce inventory levels; ending the year more than 1 percent below last year.”

The company, which has 832 stores in small markets, came into the quarter with an eye on its inventories.

This year, Stage stores expects comparable sales to fall by 1 percent to 3 percent. Earning per diluted share are slated range from 40 cents to 60 cents — roughly on par with the 51 cents logged last year, but below the 71 cents analysts projected.

“As we look ahead to 2016, we expect external headwinds to continue to impact the business,” Glazer said. “However, we believe our investments in omnichannel and store upgrades will position our business to deliver improved performance.”