Stage Stores aims to focus on technology with cuts

Stage Stores Inc. lowered its profit forecast for the year and said it plans to close at least 90 underperforming stores as the retailer invests more on digital.

The retailer said it expects the closures to enhance its capital efficiency, deliver higher productivity and allow itto invest more money in the online sales product mix and technology in general.

“While we delivered a positive comp, second quarter earnings fell short of our expectation,” said Michael Glazer, president and CEO. “We were challenged by the impact of a weaker peso and economic softness in parts of Texas, Louisiana, Oklahoma, and New Mexico. Our earnings decline over the prior year was driven by a decrease in merchandise margin as we accelerated markdowns on seasonal categories.”

The 90 closings include 27 stores expected to be shut down during fiscal 2015. Stage also plans to open three new stores during the fiscal year.

During the second quarter of fiscal 2015, net earnings plummeted 86% to $1.61 million from $11.19 million the same quarter the previous fiscal year. Charges associated with headquarters consolidation and store closure impairment drove the sharp decline in profit. Net sales rose a modest 0.9% to $380.92 million from $377.45 million. Same-store sales climbed 0.8%.

Stage Stores has revised previously issued guidance downward. The company now expects adjusted earnings of between $1.05 to $1.15 per diluted share, compared with previous guidance of $1.20 to $1.28 per diluted share. Same-store sales are projected to be flat, compared to the previous guidance range of flat to 2%