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Bear of the Day: Stage Stores (SSI) - Bear of the Day

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Stage Stores, Inc. (NYSE: SSI) is one of the many retailers that is struggling as consumers get picky on what they're buying. This Zacks Rank #5 (Strong Sell) recently lowered full year guidance.

Stage Stores has a unique part of the retail market. It operates 849 stores in 40 states in small and mid-sized cities. It offers moderately priced, nationally recognized brand name apparel, accessories, cosmetics and footwear.

The company operates under the names of Bealls, Goody's, Palais Royal, Peebles and Stage.

Big Miss in the Second Quarter

On Aug 14, Stage Stores reported its fiscal second quarter results and missed the Zacks Consensus by 31%. Earnings were just $0.35 compared to the Zacks Consensus of $0.51.

Like many of its peers, it saw comparable store sales fall 4.2% in the quarter compared to a year ago. For the first six months of the year sales decreased 2.2%.

What's working?

While the second quarter was "challenging" sales trends improved throughout the quarter. The back-to-school categories performed well as did cosmetics.

But Guidance Still Lowered

Even though it expects improved second half results, it guided comparable store sales in the range of flat to positive 2.0% for the year. Earnings guidance was lowered in the range of $1.05 to $1.15.

Analysts lowered estimates to get in line with the company's guidance. 4 estimates were lowered for 2014 in the last 60 days to $1.05 from $1.24.

Analysts also lowered estimates for fiscal 2015 to $1.29 from $1.50.

Shares Sink to 2-Year Low

It hasn't been a good 2 years for Stage Store shareholders. Shares recently hit 2-year lows.

If you thought you could get a steal on this stock, think again. It's actually not that cheap, considering its struggles. It has a forward P/E of 16.6.

For investors looking for a retailer with better prospects, you might want to consider Foot Locker Inc. (NYSE: FL) instead. It is expected to grow earnings by 19% this year. It's a Zacks Rank #2 (Buy).

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.


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