Stage Stores, Inc. (SSI)

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Stage Stores, Inc. (SSI)

2013 Consumer & Retail Conference

March 13, 2013 10:30 am ET


Michael L. Glazer - Chief Executive Officer, President and Independent Director

Oded Shein - Chief Financial Officer and Executive Vice President


Unknown Analyst


With the Stage Store presentation, very happy to have the management team from Stage here to present to you. They're planning to give a quick overview of the business first, then we'll go into a few questions from us and then open it up to the floor.

So I'd like to call to the podium, Michael Glazer. Thanks for coming.

Michael L. Glazer

Okay. Well, good morning, everyone, and thank you for your interest in Stage. Thanks for joining us this morning. I'm here with our Chief Financial Officer, Oded Shein. And it's obviously been a fantastic year for Stage Stores. I don't know any other way to put it. I'm certain that we have surprised and shocked quite a few people with our performance this year.

As we announced yesterday, and I guess this will probably be my favorite slide up here. As we announced yesterday, we had a record year, with earnings of $1.33 per share. And that was up 45% over last year's $0.92. So a great performance, frankly, for our company.

Our comp store sales increase was a -- was 5.7%, which was the best, for sure in the -- it's actually the best in the last 10 years, in more than 10 years, but it was nice, given the fact that, frankly, the 5 years before this have been, at best flat, or frankly, in some cases, down. So we're all really pleased about that -- those kind of numbers.

In terms of categories, literally, every category of merchandise had a comp store sales increase, so it was -- as I said, we're quite pleased about that.

So who is Stage Stores? First of all, I would -- I often get up and start my presentation by saying most people don't know who Stage is and that we're one of the best-kept secrets on Wall Street. And I say that because we don't have any stores, frankly, in New York City. We don't have a store on Madison Avenue or on Fifth Avenue, and chances are, you won't see us there, if for no other reasons, just the types of rents we would have to pay if we were here.

But who is Stage? 2/3 of our stores, literally 2/3 of our stores are in cities that most of you here in the audience probably can't -- have never heard off. And those are cities that have a population of 50,000 or less, and frankly, they -- it's what brings us our revenue. And these small towns, we feel, are underserved with competition. And about 20% of our stores are in what we call larger markets. Our definition of larger market, by the way, is not what you normally think of as a larger market. Our definition of a large market is a market that has about 150,000 population. So when we're talking about large market, I'm talking about places like Providence, Rhode Island. I'm talking about places like Dayton, Ohio or something like Chattanooga, Tennessee in terms of those types of things.

We have a very simple real estate strategy. The strategy is simply to find a great location, preferably next to a Wal-Mart. Wal-Mart, we're one of the few retailers who like being next to Wal-Mart. We don't -- we hope the customer comes in and buys their consumables from Wal-Mart and then comes next door. They want Estée Lauder, they want Calvin Klein, they want Nike, they come to us. So that's essentially -- our real estate strategy is to find a great location in a small town. Hopefully, the best location in that town, and pay rents that average, frankly, somewhere around $4 a square foot. Yes, I said $4 a square foot. For people here in New York City, that's probably somewhat unheard off, but our average rent is literally $4.15 a square foot.

So you can't probably see this map real well. I'm just trying to -- we are actually located in 40 different states. And in those 40 -- of those 40 states, we have 250 stores in the state of Texas, there's 63 in Louisiana, 41 in Oklahoma, but literally, we're in 40 states. And state of Ohio, for instance, if you want to question, well, what kind of growth that Stage have? I think you just have to look at a state like Ohio. We got 25 stores in Ohio. I would argue, we could easily have 100 stores with all the small cities in Ohio. And again, when I say Ohio, we don't want to go to Columbus. We don't want to be in Cincinnati. We don't want to be in Cleveland. But yes, Dayton, Akron, Toledo, those are all perfect-type cities for us and ones that present tremendous opportunities for us.

So what do we sell at Stage? You'll see on this chart that -- let me just say we sell -- about 97% of what we sell is apparel and cosmetics. And here's how the various categories, you can see up here, how they all break down. But we're all about national brands, high-profile national brands and in both apparel and in cosmetics. And so for instance, in cosmetics, we'll sell Estée Lauder, Clinique, L'Oreal, all the various names that you're all familiar with.

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