Stage Stores’ comparable sales were down in the first quarter ended May 4, but the retailer said it was encouraged by its off-price store conversion plan and its expansion of the home department.
The company reported that net sales were $328 million compared to $344 million in the previous first quarter. Comparable sales decreased 3.1%, with off-price conversions benefiting comp by 240 basis points. Net loss was $47.5 million compared to a net loss of $31.7 million in the previous first quarter. Loss per share was $1.67 compared to loss per share of $1.14 in the prior year first quarter.
“Our key growth strategies of off-price conversions and department store home growth contributed to flat comparable sales for the combined March and April period, following a double-digit decline in February,” said Michael Glazer, CEO, Stage Stores. “First quarter results included more than 500 basis points of comparable sales benefit from off-price conversions and home expansions, and a $25 million improvement in cash flow compared to 2018. That said, our first quarter results were impacted by a weak performance in women’s sportswear and by expected interruptions and up-front investments associated with the implementation of our strategies. These disruptions included temporary store closings in preparation for off-price conversion, and changing department store layouts in conjunction with expanding the home assortment. We continue to be thrilled with the results of our 46 off-price conversion stores, including the 37 stores completed in March 2019. Notably, sales in the small midwest market stores, which make up the majority of our off-price conversions, more than doubled in the first quarter versus the prior year sales. Additionally, our home expansion strategy was fully rolled out to department stores by the end of March and performance exceeded our expectations.”
Glazer continued, “We are very pleased with the results of our strategy to pivot from a department store that was overly dependent on apparel to a retailer that provides our guests with greater value, a broader assortment of merchandise categories, and the shopping experience that she is seeking. With the significant disruptions of the first quarter behind us, we expect the momentum to build as more department stores are converted to off-price and the importance of the home and gift category increases in the holiday season. Thus, we remain confident that our strategies for long-term growth will contribute meaningfully to our fiscal 2019 results, and we expect to meet our guidance and deliver positive cash flow for the year. We are reaffirming our annual guidance range of +3% to +5% comparable sales, which includes approximately 85 off-price conversions, and $10 million to $15 million of EBITDA adjusted for impairments.”
Stage Stores operates in 42 states through 685 Bealls, Goody’s, Palais Royal, Peebles and Stage specialty department stores, and 105 Gordmans off-price stores.