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Press release from Business Wire

Stage Stores Third Quarter Results Increase 6.2%

Thursday, November 18, 2010

Stage Stores Third Quarter Results Increase 6.2%06:00 EST Thursday, November 18, 2010 HOUSTON (Business Wire) -- Stage Stores, Inc. (NYSE: SSI) today reported that its third quarter results improved 6.2%. The Company had a net loss of $6.9 million, or $0.18 per share, for the third quarter ended October 30, 2010 versus a net loss of $7.3 million, or $0.19 per share, last year. For the nine months ended October 30, 2010, net income increased to $5.7 million from $0.9 million last year. Diluted earnings per share improved to $0.15 this year compared to $0.02 in the prior year period. The Company also reported that it repurchased approximately 1.7 million common shares in the third quarter for a total of $20.4 million under its $25 million Stock Repurchase Program. Andy Hall, President and Chief Executive Officer, commented, “The third quarter marked the fourth consecutive quarter in which we achieved improved bottom-line results versus the prior year. Our results for the quarter keep us on track to meet our fiscal 2010 objectives of growth in sales, operating margin and EPS.” Mr. Hall continued, “Operationally during the third quarter, we increased the number of Goody's branded stores to 62 with the addition of eleven new and thirteen rebranded stores. We continue to be very pleased with the performance of these stores. In addition, we added two Estee Lauder and two Clinique counters during the period, ending the quarter with 176 and 169 counters, respectively. We remain on track with the roll out of our markdown optimization tool and with the start-up of our eCommerce platform, which will go live with an initial 800 item selection in time for the holiday shopping period.” Mr. Hall concluded, “We are now forecasting an increase in comparable store sales for the fourth quarter of 1.0% to 3.0%. We look forward to providing our customers with exceptional service, selection and value throughout the holiday shopping period.” Fiscal 2010 – Updated Fourth Quarter and Full Year Guidance The Company anticipates that comparable store sales for the fourth quarter will be in a range of 1.0% to 3.0%. This compares to its previous guidance for the quarter of flat to a 2.0% increase. The Company noted that the diluted share count estimates for the fourth quarter and full year have been revised to reflect the effect of the shares repurchased during the third quarter. 4th Quarter 2010:                 4Q 2010 OUTLOOK4Q 2009 Sales ($mm) $448 - $457 $432   Diluted EPS $0.78 - $0.81 $0.72   Diluted Shares (m) 37,000 38,446     FY 2010:     FY 2010 OUTLOOKFY 2009 Sales ($mm) $1,465 - $1,473 $1,432   Diluted EPS $0.91 - $0.94 $0.75   Diluted Shares (m) 38,000 38,413   Conference Call Information The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its third quarter results. Interested parties can participate in the Company's conference call by dialing 703-639-1161. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestoresinc.com and then clicking on Webcasts, then the webcast link. A replay of the conference call will be available online until midnight on Friday, November 26, 2010. About Stage Stores Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns and communities through 789 stores located in 39 states. The Company operates its stores under the five names of Bealls, Goody's, Palais Royal, Peebles and Stage. For more information about Stage Stores, visit the Company's web site at www.stagestoresinc.com. Caution Concerning Forward-Looking Statements This document contains “forward-looking statements.” Forward-looking statements reflect our expectations regarding future events and operating performance and often contain words such as "believe," "expect," "may," "will," "should," "could," "anticipate," "plan" or similar words. In this document, forward-looking statements include comments regarding the Company's sales, comparable store sales and EPS outlooks for the fourth quarter of the 2010 fiscal year, as well as for the entire 2010 fiscal year. Forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC") on March 30, 2010, and other factors as may periodically be described in our other filings with the SEC. Forward-looking statements speak only as of the date of this document. We do not undertake to update our forward-looking statements. Stage Stores, Inc.Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)                   Thirteen Weeks Ended October 30, 2010 October 31, 2009 Amount % to Sales (1) Amount % to Sales (1)   Net sales $ 331,850 100.0 % $ 324,944 100.0 % Cost of sales and related buying, occupancy and distribution expenses   255,260   76.9 %   251,396   77.4 % Gross profit 76,590 23.1 % 73,548 22.6 % Selling, general and administrative expenses 86,827 26.2 % 83,222 25.6 % Store opening costs 1,189 0.4 % 1,174 0.4 % Interest expense, net of income of $21 and $1, respectively   937   0.3 %   1,079   0.3 % Loss before income tax (12,363 ) -3.7 % (11,927 ) -3.7 % Income tax benefit   (5,498 ) -1.7 %   (4,608 ) -1.4 % Net loss $ (6,865 ) -2.1 % $ (7,319 ) -2.3 %   Basic and diluted loss per share data:   Basic loss per share $ (0.18 ) $ (0.19 ) Basic weighted average shares outstanding   37,362     38,084     Diluted loss per share $ (0.18 ) $ (0.19 ) Diluted weighted average shares outstanding   37,362     38,084       (1) Percentages may not foot due to rounding.   Stage Stores, Inc.Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)                   Thirty-Nine Weeks Ended October 30, 2010 October 31, 2009 Amount % to Sales (1) Amount % to Sales (1)   Net sales $ 1,016,911 100.0 % $ 1,000,247 100.0 % Cost of sales and related buying, occupancy and distribution expenses   746,276 73.4 %   742,019 74.2 % Gross profit 270,635 26.6 % 258,228 25.8 % Selling, general and administrative expenses 257,031 25.3 % 250,682 25.1 % Store opening costs 3,024 0.3 % 2,825 0.3 % Interest expense, net of income of $71 and $77, respectively   2,979 0.3 %   3,378 0.3 % Income before income tax 7,601 0.7 % 1,343 0.1 % Income tax expense   1,941 0.2 %   474 0.0 % Net income $ 5,660 0.6 % $ 869 0.1 %   Basic and diluted earnings per share data:   Basic earnings per share $ 0.15 $ 0.02 Basic weighted average shares outstanding   37,998   38,028   Diluted earnings per share $ 0.15 $ 0.02 Diluted weighted average shares outstanding   38,318   38,403     (1) Percentages may not foot due to rounding.   Stage Stores, Inc.Condensed Consolidated Balance Sheets (in thousands, except par value)           October 30, 2010 January 30, 2010 (Unaudited) ASSETS Cash and cash equivalents $ 45,476 $ 93,714 Merchandise inventories, net 420,078 306,360 Prepaid expenses and other current assets   29,647     27,095   Total current assets 495,201 427,169   Property, equipment and leasehold improvements, net 326,056 342,001 Intangible asset 14,910 14,910 Other non-current assets, net   17,965     16,351   Total assets $ 854,132   $ 800,431     LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 184,171 $ 100,602 Current portion of debt obligations 13,295 12,726 Accrued expenses and other current liabilities   67,523     69,688   Total current liabilities 264,989 183,016   Long-term debt obligations 28,449 38,492 Other long-term liabilities   101,885     102,877   Total liabilities   395,323     324,385     Commitments and contingencies   Common stock, par value $0.01, 100,000 shares authorized, 56,832 and 56,080 shares issued, respectively 568 561 Additional paid-in capital 512,756 501,800 Less treasury stock - at cost, 20,230 and 18,071 shares, respectively (315,453 ) (288,079 ) Accumulated other comprehensive loss (5,698 ) (5,897 ) Retained earnings   266,636     267,661   Total stockholders' equity   458,809     476,046   Total liabilities and stockholders' equity $ 854,132   $ 800,431     Stage Stores, Inc.Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited)           Thirty-Nine Weeks Ended October 30, 2010 October 31, 2009   Cash flows from operating activities: Net income $ 5,660 $ 869 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and impairment of long-lived assets 45,953 45,053 Loss on retirements of property, equipment and leasehold improvements 307 - Deferred income tax (benefits) expense (86 ) 662 Tax benefits (deficiency) from stock-based compensation 966 (391 ) Stock-based compensation expense 4,842 4,953 Amortization of debt issue costs 224 218 Excess tax benefits from stock-based compensation (1,936 ) (129 ) Deferred compensation obligation 65 93 Amortization of employee benefit related costs 320 390 Construction allowances from landlords 5,217 3,543 Changes in operating assets and liabilities: Increase in merchandise inventories (113,718 ) (64,814 ) (Increase) decrease in other assets (4,495 ) 2,060 Increase in accounts payable and other liabilities   72,999     74,431   Total adjustments   10,658     66,069   Net cash provided by operating activities   16,318     66,938     Cash flows from investing activities: Additions to property, equipment and leasehold improvements (28,049 ) (36,110 ) Proceeds from insurance related to property, equipment and leasehold improvements   -     578   Net cash used in investing activities   (28,049 )   (35,532 )   Cash flows from financing activities: Proceeds from revolving credit facility borrowings - 133,225 Payments of revolving credit facility borrowings - (133,225 ) Proceeds from long-term debt obligations - 1,585 Payments of long-term debt obligations (9,474 ) (8,805 ) Repurchases of common stock (27,374 ) (289 ) Proceeds from exercise of stock awards 5,090 891 Excess tax benefits from stock-based compensation 1,936 129 Cash dividends paid   (6,685 )   (5,712 ) Net cash used in financing activities   (36,507 )   (12,201 ) Net (decrease) increase in cash and cash equivalents (48,238 ) 19,205   Cash and cash equivalents: Beginning of period   93,714     26,278   End of period $ 45,476   $ 45,483   Stage Stores, Inc.Vice President, Investor RelationsBob Aronson, 800-579-2302baronson@stagestores.com