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Stage Stores Lowers Profit Forecast, Will Close 90 Stores

Stage Stores announced plans Thursday to shut 90 underperforming stores as it disclosed lower-than-expected second-quarter earnings and lowered its profit forecast for the year.

The Houston-based department store chain posted a profit of $1.6 million, or $0.05 per diluted share, for the quarter ended Aug. 1, compared with $0.35 per diluted share in the year-ago period, while sales increased less than 1 percent to $380.9 million from $377.4 million.

“While we delivered a positive comp, second quarter earnings fell short of our expectation,” Michael Glazer, president and chief executive officer, said in a statement, adding, “We were challenged by the impact of a weaker peso and economic softness in parts of Texas, Louisiana, Oklahoma and New Mexico. Our earnings decline over the prior year was driven by a decrease in merchandise margin as we accelerated markdowns on seasonal categories.”

The retailer did not say which stores are on the chopping block but noted that 27 locations would close and three new ones would open by the end of the fiscal year. It currently operates 850 stores in 40 states and a direct-to-consumer channel under the Bealls, Goody’s, Palais Royal, Peebles and Stage nameplates.

“The closure of stores should enhance our capital efficiency, deliver high productivity and be accretive to earnings,” Glazer continued. “We are also increasing our emphasis on trends and style, improving our store environment and strengthening our connection to our customers.”

The company now expects its adjusted earnings to be between $1.05 and $1.15 per diluted share, compared with previous guidance of $1.20 to $1.28 per diluted share, while sales are projected to be flat, down from earlier estimates of 2 percent growth.

“Although we are excited for the positive benefits of our initiatives, we are reducing our full-year guidance, as we expect that the macro headwinds of the first half are likely to extend to the remainder of the year,” Glazer said. “Longer term, we believe that the strategic initiatives we have in place will drive strong and consistent earnings growth and increased shareholder returns.”