Stage Stores selling Steele's unit, charge hits 4Q

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HOUSTON (AP) — Stage Stores' fiscal fourth-quarter net income fell 30 percent, stung by a charge tied to the sale of its Steele's discount store division and softer revenue. Its adjusted earnings topped analysts' estimates.

Stage Stores said Thursday that it is selling its off-price retail division Steele's to Hilco Global Retail Group in an equity deal whose value could not immediately be determined.

Stage Stores Inc. launched Steele's in 2011. The chain sells clothing, accessories, shoes and home decor items at discounted prices. Stage Stores currently runs 35 Steele's stores in seven states. Stage Stores also has 848 stores in 40 states under brands including Bealls, Goody's, Palais Royal, Peebles and Stage.

The companies said that Stage Stores will provide certain support services through its operating subsidiary Specialty Retailers Inc. for an undisclosed time period after the transaction is complete. The deal is expected to close in the current quarter.

For the period ended Feb. 1, Stage Stores earned $24.9 million, or 78 cents per share. A year earlier it earned $35.8 million, or $1.09 per share.

Removing an impairment charge related to Steele's and items tied to the consolidation of its South Hill, Va. operations into its Houston headquarters, earnings were $1.01 per share.

Analysts surveyed by FactSet expected earnings of 99 cents per share.

Revenue dropped 5 percent to $499.4 million from $527.9 million. Taking out Steele's, revenue for the current quarter totaled $493 million. Wall Street predicted revenue of $510.3 million.

The prior-year period included an extra week of sales.

Sales at stores open at least a year declined 3.4 percent. Adjusting for a calendar shift, the figure dipped 1.1 percent.

This metric is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

For the year, Stage Stores earned $16.6 million, or 51 cents per share. That compares with $38.2 million, or $1.19 per share, in the previous year. Adjusted earnings were $1.22 per share.

Annual revenue slipped 1 percent to $1.63 billion from $1.65 billion. Excluding Steele's, revenue totaled $1.61 billion.

Sales at stores open at least a year fell 1.5 percent. The metric declined 1.1 percent when adjusting for the calendar shift.

Looking ahead, Stage Stores anticipates 2014 adjusted earnings between $1.35 and $1.45 per share. Revenue, excluding Steele's, is forecast in a range of $1.64 billion to $1.67 billion.

Sales at stores open at least a year, excluding Steele's, is expected to be flat to up 2 percent.

Analysts foresee full-year earnings of $1.36 per share on revenue of $1.71 billion.

Its shares finished at $19.75 on Wednesday. Its shares are down 25 percent for the past year.

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