I wrote this article a year ago...and noticed Stage Stores (SSI) was a mover today +10% and wanted to look back at my thesis at the time. Share price at this time were to fall another 60% and still sit 30% lower for the year. Shares are currently trading around $6 a far cry from the $17 area just a year ago. It may take retail a bit to turn the ship, but often the share prices begin to turn long before the balance sheet. " Look for CEO Glazer to pivot SSI and find a way to leverage his customer base and margin capabilities, Stage Store is the kind of stock we follow at Equities.com, not because it is an explosive growth stock, but because it gives us a window to the ever changing consumer and a chance to right our observation ship."
By Steve Kanaval |
Nearly every city has a Stage brand store, and you probably don't know they are related and part of the Stage Store mother ship, but Bealls, Peebles, Palais Royal, Goodys and Stage stores reside in 450 outlets in every NFL city in America aiming at the midsize, midmarket consumer and are about as representative of consumer demand as a franchise could be.
Today, Stage Stores (SSI) missed numbers, lowered guidance, and is closing stores, knocking shares down 30% in morning trade. I think this is a case of management needing to swallow hard and cut fat as the consumer changes the way they buy — and I expect Stage to invest more money in the online sales product mix and technology in general, a smart move for the company as we head into Q4 2015.
Cutting 90 stores out of 450 cuts a large swath across the retail landscape for Stage Stores, but it really is not surprising as the days of shoppers browsing smaller strip mall locations is replaced by pc or mobile browsing. I have always liked following SSI because they are balls-on accurate as a proxy for consumer sentiment and demand. I love this small-cap company for that reason, and they seem to be doing the correct thing here.
Shares are down 43% for the year with today's miss, but the irony is even with this sell off SSI is above the lows of 2008 when we had a global collapse in stock prices across the board, I think it tells much about how well the stock performs in any environment.
The challenge lies ahead for SSI as they enter the new era of Amazon (AMZN) and software that is eating the world. The skill set of these managers lies in the margin capability and finding a grasp of the mid-market consumer that they can execute quarter after quarter. Jeez, I sound like a pitch man, but I have never owned this stock or been paid to write about them — I just admire them from afar. But what I am really looking at through this lens is the actionable consumer behavior needed to be a market observer in retail and consumer demand itself.
Look for CEO Glazer to pivot SSI and find a way to leverage his customer base and margin capabilities, Stage Store is the kind of stock we follow at Equities.com, not because it is an explosive growth stock, but because it gives us a window to the ever changing consumer and a chance to right our observation ship.
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