Stage Stores to close 30 units after weak Q4
Warm weather was a problem for most retailers in the fourth quarter, but Houston-based Stage Stores also got hit by weakness in the energy sector and the Mexican Peso.
During the company’s fourth quarter ended Jan. 30, sales declined 4.2% to $502.6 million and same store sales declined 3.4%. Full year sales declined 2.1% to $1.6 billion and same store sales fell 2%. Profits fell sharply to $21 million, or 72 cents a share, from $43.7 million, or $1.36 a share the prior year. In conjunction with the release of fourth quarter results, the company said it planned no new store openings in 2016 but said it would close 30 of its 832 units.
“Our holiday results were pressured by low oil prices, the devalued peso and record warm temperatures. Stores in the oil patch and along the Mexican border account for more than 40% of our sales, and the economic uncertainty in those areas negatively impacted our comp sales by 240 basis points during the fourth quarter,” said Stage Stores President and CEO Michael Glazer. “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% below last year. We saw positive sales performance in several non-apparel categories along with 20% growth in our direct-to-consumer business. As we look ahead to 2016, we expect external headwinds to continue to impact the business. However, we believe our investments in omnichannel and store upgrades will position our business to deliver improved performance.”
In 2016, the company said its expects same store sale to decline between 1% and 3% with total sales forecast to range from $1.53 billion to $1.56 billion. Earnings per share are expected to range from 40 cents to 60 cents compared to 12 cents a share in the recently ended fiscal year.
“We will continue to operate with disciplined expense controls and inventory management as we remain cautious in the current environment. We believe that investing in our omnichannel capabilities and stores will invigorate our business, drive sales, improve margins and create positive cash flow in 2016.”
Stage Store’s performance in 2015 looks less bad if profits are adjusted to exclude some non-recurring expenses. Various strategic initiatives, including the consolidation of the company’s headquarters, impairments related to 23 store closures and severance charges associated with a workforce reduction cost the company 20 cents a share in the fourth quarter and 39 cents for the full year.