Stage Stores Announces First Quarter Results

Business Wire, May 22, 2008

Provides Second Quarter, Second Half and Updated Full Year Guidance

HOUSTON -- Stage Stores, Inc. (NYSE:SSI) today reported net income for the first quarter ended May 3, 2008 of $2.3 million, or $0.06 per diluted share. Last year's net income, excluding a non-comparable gain of $1.7 million, or $0.04 per diluted share, related to the March 2004 sale of the Peebles private label credit card portfolio, was $7.4 million, or $0.16 per diluted share.

As previously reported by the Company, total sales for the first quarter were $353.5 million versus $358.2 million for the same period last year. Comparable store sales for the quarter decreased 5.4% versus an increase of 0.1% in the prior year.

Jim Scarborough, Chairman and Chief Executive Officer, commented, "Our first quarter results are a reflection of the currently challenging economic and retail environment. Ongoing price increases for gasoline and groceries, continuing turmoil in the housing market, and job uncertainty clearly dampened the mood of the consumer, leading to the shortfall in our first quarter sales and earnings vs. last year.

"We are proud of the way that our associates have responded to these challenges during these uncertain economic times by carefully managing inventory levels and expenses, while continuing to provide exceptional service to our customers. As a result of our tightened inventory management practices, we ended the quarter with inventories on a comparable store basis down 4.8% compared to last year's levels.

"During the quarter, we made progress on a number of our strategic initiatives. We opened 23 new stores, relocated 5 stores, and expanded 2 stores. We also completed the installation of 17 new Estee Lauder counters and 14 new Clinique counters. Our efforts to grow our cosmetics business yielded positive results as this category achieved a comparable store sales increase of 12.9% during the period.

"As we enter the second quarter, we believe that our inventories are at appropriate levels and we are pleased with our merchandise assortments. We plan to open 5 new stores during the quarter, 2 of which will be in Idaho, our 36th state. We also plan to complete the installation of 6 additional Estee Lauder and 2 additional Clinique counters. Lastly, we look forward to the July opening of our third distribution center, which is located in Jeffersonville, Ohio. This new distribution facility will play an important role in supporting our ongoing unit growth and geographic expansion," Mr. Scarborough concluded.

FISCAL 2008 - SECOND QUARTER, SECOND HALF AND UPDATED FULL YEAR GUIDANCE

Commenting on the Company's outlook, Mr. Scarborough stated, "Certainly, for the near term, we believe that consumers will continue to face economic headwinds, and as a result, we are projecting that our comparable store sales will be down between 3.0% and 5.0% during the second quarter. Based upon easier year-over-year sales comparisons, we currently forecast that our comparable store sales will be down in the range of 1.0% to 3.0% during the second half of the year."

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* FY 2007 results include a non-comparable gain of $0.04 per diluted share related to the March 2004 sale of the Peebles private label credit card portfolio.

Conference Call Information

The Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss its first quarter results. Interested parties can participate in the Company's conference call by dialing 703-639-1173. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestores.com and then clicking on Investor Relations, then Webcasts, then the webcast link. A replay of the conference call will be available online until midnight on Friday, May 30, 2008.

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 717 stores located in 35 states. The Company operates under the Bealls, Palais Royal and Stage names throughout the South Central and Southwestern states, and under the Peebles name throughout the Midwestern, Southeastern, Mid-Atlantic and New England states. For more information about Stage Stores, visit the Company's web site at www.stagestores.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 and earnings outlook for the second quarter and second half of the 2008 fiscal year, as well as for the full 2008 fiscal year. Forward-looking statements also include comments regarding the number of stores that the Company plans to open, and the number of Estee Lauder and Clinique counters that the Company intends to install, in the second quarter of the 2008 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 April 1, 2008 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.