Stage Stores Reports 19% Increase in Fourth Quarter EPS and 32% Increase in Full Year EPS

Stage Stores, Inc. (NYSE:SSI) today reported net income for the fourth quarter ended January 29, 2011 of $32.0 million versus $27.9 million for the prior year fourth quarter ended January 30, 2010. Diluted earnings per share for the quarter increased 19% to $0.86 this year from $0.72 last year.

For the 2010 fiscal year, the Company reported net income of $37.6 million versus $28.7 million for the 2009 fiscal year. Diluted earnings per share for the year increased 32% to $0.99 this year from $0.75 last year.

The Company also reported today that it completed its $25 million Stock Repurchase Program during the fourth quarter. The Company repurchased approximately 0.3 million shares during the quarter. In total, the Company repurchased approximately 2.0 million shares under its $25 million Stock Repurchase Program.

Commenting on the Company’s fourth quarter and full year results, Andy Hall, President and Chief Executive Officer, stated, "We are very pleased with our 19% increase in fourth quarter earnings per share. The improved EPS was primarily driven by a 5.1% increase in total sales coupled with a 130 basis point improvement in our gross profit rate.

"We are also very pleased with our 32% increase in earnings per share for the year. A 2.7% increase in total sales combined with a 90 basis point improvement in our gross profit rate accounted for most of the year-over-year improvement in EPS.

"We continued to make progress on our key growth initiatives during the year:

• Growth of the Goody’s nameplate - we opened 33 new stores, 30 of which were opened under the Goody’s name. We also rebranded 26 non-Goody’s stores with the Goody’s name. In all, we ended the year with 71 Goody’s stores. We continue to be very pleased with the performance of both our new and rebranded Goody’s stores.
• Cosmetics - we added eight Estee Lauder and seventeen Clinique counters during the year, ending with 176 and 169 counters, respectively.
• Markdown optimization – we began the roll-out of our markdown optimization tool and expect to be completed in early spring 2011.
• eCommerce - we successfully launched our eCommerce platform in the fourth quarter. The initial customer interest and sales activity exceeded our expectations.
• Shareholder value - we increased our quarterly dividend rate by 50% and completed our $25 million stock repurchase program.”

Mr. Hall concluded, "We are proud of our associates and their many achievements this year. We have momentum as we embark on 2011 and we have confidence in our ability to meet our 2011 objective of continued growth.”

Fiscal 2011 - First Quarter and Full Year Projections

The Company is projecting first quarter comparable store sales to increase 1% to 3%. Within the quarter, the Company expects comparable store sales for March to be down mid single digits, and for April to be up double digits, due to the Easter calendar shift. The Company noted that the EPS and diluted shares projections do not include any impact from its new Stock Repurchase Program.

1^st Quarter 2011:

For the 2011 fiscal year, comparable store sales for the fiscal year are expected to increase 1% to 3%. The Company is planning to open 35 – 40 new stores and anticipates spending $40 million in net capital expenditures.

FY 2011:

$200 Million Stock Repurchase Program

The Company announced today that its Board of Directors has approved a new Stock Repurchase Program which authorizes the Company to repurchase up to $200 million of its outstanding common stock.

Commenting on the Company’s new $200 million Stock Repurchase Program, Mr. Hall stated, "Our strong balance sheet and cash flow allow us to undertake a significant new stock repurchase program. The $200 million authorization represents approximately one third of our current market value. Our intention is to repurchase up to $100 million of our shares during 2011 and to complete the program by the end of 2013. Our new stock repurchase program is consistent with our philosophy of deploying capital in a way that benefits our shareholders. Today’s announcement reflects the strength of our business model and reaffirms our confidence and optimism in the long term future of our company.”

Under the Company’s new $200 million Stock Repurchase Program, the Company may repurchase its outstanding common stock from time to time up to the approved amount, either on the open market or through privately negotiated transactions. The Stock Repurchase Program will be financed by the Company’s existing cash, cash flow and other liquidity sources, as appropriate.

Since the specific timing and amount of repurchases will vary based on market conditions and other factors, there can be no assurance as to the amount, timing or prices of these stock repurchases. Additionally, this Stock Repurchase Program may be modified, extended or terminated by the Company’s Board of Directors at any time.

Conference Call Information

The Company will host a conference call today at 8:30 a.m. Eastern Time to discuss its fourth quarter results. Interested parties can participate in the Company’s conference call by dialing 703-639-1129. Alternatively, interested parties can listen to a live webcast of the conference call by logging on to the Company's web site at www.stagestoresinc.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, March 18, 2011.

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 784 stores located in 39 states. The Company operates its stores under the five names of Bealls, Goody’s, Palais Royal, Peebles and Stage. For more information about Stage Stores, visit the Company’s web site at www.stagestoresinc.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 number of stores that the Company plans to open in fiscal 2011. Forward-looking statements also include comments regarding the Company’s outlook for comparable store sales in March and April. Forward-looking statements also include comments regarding the Company’s sales, earnings and diluted share count projections for the first quarter of the 2011 fiscal year and full 2011 fiscal year, as well as comments regarding the estimated amount of capital expenditures for the full 2011 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 March 30, 2010, 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.