Seeking Alpha: Stage Stores Taking A More Realistic Approach

Amidst a challenging retail environment, Stage Stores (NYSE:SSI) has been an interesting story to follow as the company has been challenged by internal execution issues and a changing retail industry. Stage still has some real issues with sales productivity and margins, but management seems willing and able to address these issues more directly instead of trying to grow its way past them.

I've run hot-and-cold on the shares (or rather bullish and "hold/wait") over the past couple of years as the shares have oscillated between the mid-to-high teens and mid-to-high $20's. I was bullish on the stock as of my last article and while the stock is up more than 20% since then, the shares spent the following six months trending down about 15% before a rally late in 2014. I'd also note that investors would have done much better with Kohl's (NYSE:KSS) and a little better with Dillard's (NYSE:DDS).

This is a challenging stock for me right now. On one hand, I do still see the potential for the company to meaningfully grow its footprint and improve its internal sales productivity by adding more cosmetics and home goods and refurbishing its store base. On the other hand, the company has become more dependent on credit-related income and there is a real risk that the retailing landscape has fundamentally shifted. I don't think these shares are necessarily expensive today, but further upside really is tied to real progress with comp growth and margins more than the Street regaining its enthusiasm for the name.

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Stage Stores Taking A More Realistic Approach