Seeking Alpha: Stage Stores Needs To Regain Its Footing

Although investors seem to be largely inured to the idea of tough times in the retailing world, the actual numbers aren't as bad as you might expect. Stocks like J.C. Penney (JCP) and Sears (SHLD) have gotten thumped, but others like Kohl's (KSS) and Dillard's (DDS) are at least in the black for the past year, while Macy's (M) has actually been a market-beater. Stage Stores (SSI) has been part of the bad crowd, with the shares down 13% and within 10% of their 52-week low, as investors have grown disillusioned with comp growth misses and halting progress towards better margins.

I do worry that turning bullish on Stage Stores today is like reaching out to catch a falling knife, but I like the basic business model and I believe the company has a strategy in place that can drive better operating results. Stage Stores still serves an under-penetrated addressable market of smaller towns and better merchandising should ultimately lead to better margins. If the company can improve its bottom line profitability, a turnaround could take these shares into the mid-$20s while the current price already seems to discount the idea that management can't really do any better.

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Stage Stores Needs To Regain Its Footing