10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 30, 2010

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to

Commission File Number 1-14035

Stage Stores, Inc.

(Exact name of registrant as specified in its charter)

NEVADA (State or other jurisdiction of incorporation or organization)	91-1826900 (I.R.S. Employer Identification No.)
10201 Main Street, Houston, Texas (Address of principal executive offices)	77025 (Zip Code)

(800) 579-2302

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ  Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of December 1, 2010, there were 36,619,008 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS
PART I  FINANCIAL INFORMATION
			Page No.
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets
		October 30, 2010 and January 30, 2010	3
	Condensed Consolidated Statements of Operations
		Thirteen and Thirty-Nine Weeks Ended October 30, 2010 and October 31, 2009	4
	Condensed Consolidated Statements of Cash Flows
		Thirty-Nine Weeks Ended October 30, 2010 and October 31, 2009	5
	Condensed Consolidated Statement of Stockholders’ Equity
		Thirty-Nine Weeks Ended October 30, 2010	6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		21
Item 4.	Controls and Procedures		21
PART II  OTHER INFORMATION
Item 1.	Legal Proceedings		22
Item 1A.	Risk Factors		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 3.	Defaults Upon Senior Securities		23
Item 4.	(Removed and Reserved)		23
Item 5.	Other Information		23
Item 6.	Exhibits		23
SIGNATURES			25

2

Table of Contents

References to a particular year are to Stage Stores Inc.’s fiscal year, which is the 52- or 53-week period ending on the Saturday closest to January 31st of the following calendar year.  For example, a reference to “2009” is a reference to the fiscal year ended January 30, 2010 and a reference to "2010" is a reference to the fiscal year ending January 29, 2011.  2009 and 2010 are 52-week years.

PART I - FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS

Stage Stores, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)
	October 30, 2010			January 30, 2010
ASSETS
Cash and cash equivalents	$	45,476		$	93,714
Merchandise inventories, net		420,078			306,360
Prepaid expenses and other current assets		29,647			27,095
Total current assets		495,201			427,169
Property, equipment and leasehold improvements, net		326,056			342,001
Intangible asset		14,910			14,910
Other non-current assets, net		17,965			16,351
Total assets	$	854,132		$	800,431
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	184,171		$	100,602
Current portion of debt obligations		13,295			12,726
Accrued expenses and other current liabilities		67,523			69,688
Total current liabilities		264,989			183,016
Long-term debt obligations		28,449			38,492
Other long-term liabilities		101,885			102,877
Total liabilities		395,323			324,385
Commitments and contingencies
Common stock, par value $0.01, 100,000 shares authorized,
56,832 and 56,080 shares issued, respectively		568			561
Additional paid-in capital		512,756			501,800
Less treasury stock - at cost, 20,230 and 18,071 shares, respectively		(315,453	)		(288,079	)
Accumulated other comprehensive loss		(5,698	)		(5,897	)
Retained earnings		266,636			267,661
Total stockholders' equity		458,809			476,046
Total liabilities and stockholders' equity	$	854,132		$	800,431

  The accompanying notes are an integral part of these financial statements.

3

Table of Contents

Stage Stores, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 30, 2010			October 31, 2009			October 30, 2010		October 31, 2009
Net sales	$	331,850		$	324,944		$	1,016,911	$	1,000,247
Cost of sales and related buying, occupancy
and distribution expenses		255,260			251,396			746,276		742,019
Gross profit		76,590			73,548			270,635		258,228
Selling, general and administrative expenses		86,827			83,222			257,031		250,682
Store opening costs		1,189			1,174			3,024		2,825
Interest expense, net of income of $21 and $1
for the thirteen weeks and $71 and $77
for the thirty-nine weeks, respectively		937			1,079			2,979		3,378
(Loss) income before income tax		(12,363	)		(11,927	)		7,601		1,343
Income tax (benefit) expense		(5,498	)		(4,608	)		1,941		474
Net (loss) income	$	(6,865	)	$	(7,319	)	$	5,660	$	869
Basic and diluted (loss) earnings per share data:
Basic (loss) earnings per share	$	(0.18	)	$	(0.19	)	$	0.15	$	0.02
Basic weighted average shares outstanding		37,362			38,084			37,998		38,028
Diluted (loss) earnings per share	$	(0.18	)	$	(0.19	)	$	0.15	$	0.02
Diluted weighted average shares outstanding		37,362			38,084			38,318		38,403

  The accompanying notes are an integral part of these financial statements.

4

Stage Stores, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
	Thirty-Nine Weeks Ended
	October 30, 2010			October 31, 2009
Cash flows from operating activities:
Net income	$	5,660		$	869
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and impairment of long-lived assets		45,953			45,053
Loss on retirements of property, equipment and leasehold improvements		307			-
Deferred income tax (benefits) expense		(86	)		662
Tax benefits (deficiency) from stock-based compensation		966			(391	)
Stock-based compensation expense		4,842			4,953
Amortization of debt issuance costs		224			218
Excess tax benefits from stock-based compensation		(1,936	)		(129	)
Deferred compensation obligation		65			93
Amortization of employee benefit related costs		320			390
Construction allowances from landlords		5,217			3,543
Changes in operating assets and liabilities:
Increase in merchandise inventories		(113,718	)		(64,814	)
(Increase) decrease in other assets		(4,495	)		2,060
Increase in accounts payable and other liabilities		72,999			74,431
Total adjustments		10,658			66,069
Net cash provided by operating activities		16,318			66,938
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements		(28,049	)		(36,110	)
Proceeds from insurance and retirements of property, equipment and leasehold improvements		-			578
Net cash used in investing activities		(28,049	)		(35,532	)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings		-			133,225
Payments of revolving credit facility borrowings		-			(133,225	)
Proceeds from long-term debt obligations		-			1,585
Payments of long-term debt obligations		(9,474	)		(8,805	)
Repurchases of common stock		(27,374	)		(289	)
Proceeds from exercise of equity grants		5,090			891
Excess tax benefits from stock-based compensation		1,936			129
Cash dividends paid		(6,685	)		(5,712	)
Net cash used in financing activities		(36,507	)		(12,201	)
Net (decrease) increase in cash and cash equivalents		(48,238	)		19,205
Cash and cash equivalents:
Beginning of period		93,714			26,278
End of period	$	45,476		$	45,483
Supplemental disclosures:
Interest paid	$	2,845		$	3,336
Income taxes paid	$	2,434		$	3,310
Unpaid liabilities for capital expenditures	$	5,812		$	3,082

  The accompanying notes are an integral part of these financial statements.

5

Table of Contents

 

	Stage Stores, Inc.
Condensed Consolidated Statement of Stockholders' Equity
For the Thirty-Nine Weeks Ended October 30, 2010
(in thousands, except per share amount)
(Unaudited)
														Accumulated
		Common				Additional		Treasury						Other
		Stock				Paid-in		Stock						Comprehensive			Retained
		Shares		Amount		Capital		Shares			Amount			Loss			Earnings			Total
Balance, January 30, 2010			56,080	$	561	$	501,800		(18,071	)	$	(288,079	)	$	(5,897	)	$	267,661		$	476,046
Net income			-		-		-		-			-			-			5,660			5,660
Amortization of employee benefit
related costs, net of tax of $0.1 million			-		-		-		-			-			199			-			199
Comprehensive income																					5,859
Dividends on common stock,
$0.175 per share			-		-		-		-			-			-			(6,685	)		(6,685	)
Deferred compensation			-		-		65		-			(65	)		-			-			-
Repurchases of common stock			-		-		-		(2,159	)		(27,218	)		-			-			(27,218	)
Stock options and SARs exercised			677		7		4,978		-			-			-			-			4,985
Issuance of stock awards, net			75		-		105		-			(91	)		-			-			14
Stock-based compensation expense			-		-		4,842		-			-			-			-			4,842
Tax benefit from stock-based
compensation			-		-		966		-			-			-			-			966
Balance, October 30, 2010			56,832	$	568	$	512,756		(20,230	)	$	(315,453	)	$	(5,698	)	$	266,636		$	458,809

  The accompanying notes are an integral part of these financial statements.

6

Table of Contents

Stage Stores, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.           Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of Stage Stores, Inc. and subsidiary (“Stage Stores” or the "Company") have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for complete financial statements.  Those adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods have been made.  The results of operations for such interim periods are not necessarily indicative of the results of operations for a full year.  The Condensed Consolidated Financial St atements (Unaudited) should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto filed with Stage Stores’ Annual Report on Form 10-K for the year ended January 30, 2010.  References to a particular year are to Stage Stores’ fiscal year, which is the 52- or 53-week period ending on the Saturday closest to January 31st of the following calendar year.  For example, a reference to “2009” is a reference to the fiscal year ended January 30, 2010 and a reference to "2010" is a reference to the fiscal year ending January 29, 2011.  References to “current year” pertain to the thirty-nine weeks ended October 30, 2010, and references to “prior year” pertain to the thirty-nine weeks ended October 31, 2009.

Stage Stores is a Houston, Texas-based regional, specialty department store retailer offering moderately priced, nationally recognized brand name and private label apparel, accessories, cosmetics and footwear for the entire family.  As of October 30, 2010, the Company operated 788 stores located in 39 states.  The Company operates its stores under the five names of Bealls, Goody’s, Palais Royal, Peebles and Stage.

Correction of Statements of Cash Flows.  The Company has corrected the presentation of proceeds from (payments of) the Revolving Credit Facility in 2009.  Related amounts had previously been presented on a net basis, rather than on a gross basis in accordance with Accounting Standards Codification (“ASC”) No. 230, Statement of Cash Flows.  The correction had no effect on net cash used in financing activities.

Recent Accounting Standards.In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, Improving Disclosures about Fair Value Measurements, which requires entities to make new disclosures about recurring and nonrecurring fair value measurements including significant transfers in and out of Level 1 and 2 categories and information on purchase, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 measurements (see Note 7 for definitions). The new disclosure requirements are effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures, which is effective for fiscal years beginning after December 15, 2010.  The adoption of applicable provisions of ASU 2010-06 did not have a material impact on the Company’s consolidated financial statements.

2.           Stock-Based Compensation

As approved by the Company’s shareholders, the Company established the Amended and Restated 2001 Equity Incentive Plan (the “2001 Equity Incentive Plan”) and the Amended and Restated 2008 Equity Incentive Plan (the “2008 Equity Incentive Plan” and collectively with the 2001 Equity Incentive Plan, the “Equity Incentive Plans”) to reward, retain and attract key personnel.  The Equity Incentive Plans provide for grants of nonqualified or incentive stock options, stock appreciation rights (“SARs”), performance shares or units, stock units and stock grants.  To fund the 2001 Equity Incentive Plan and the 2008 Equity Incentive Plan, 12,375,000 and 2,750,000 shares, respectively, of the Company’s common stock w ere reserved for issuance upon exercise of awards.

7

Table of Contents

The following table summarizes stock-based compensation expense by type of grant for the thirteen and thirty-nine weeks ended October 30, 2010 and October 31, 2009 (in thousands):

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 30, 2010			October 31, 2009			October 30, 2010			October 31, 2009
Stock options and SARs	$	993		$	882		$	2,749		$	2,874
Non-vested stock		350			276			992			827
Performance shares		541			501			1,101			1,252
Total compensation expense		1,884			1,659			4,842			4,953
Related tax benefit		(716	)		(635	)		(1,840	)		(1,897	)
	$	1,168		$	1,024		$	3,002		$	3,056

As of October 30, 2010, the Company had unrecognized compensation cost of $12.9 million related to stock-based compensation awards granted.  That cost is expected to be recognized over a weighted average period of 2.4 years.

The following table provides the significant weighted average assumptions used in determining the estimated fair value, at the date of grant under the Black-Scholes option-pricing model, of SARs granted in the thirty-nine weeks ended October 30, 2010 and October 31, 2009:

	Thirty-Nine Weeks Ended
	October 30, 2010	October 31, 2009
Expected volatility	62.1% - 63.7%	59.4% - 61.6%
Weighted average volatility	62.2%	59.4%
Risk-free rate	1.2% - 2.3%	1.6% - 2.0%
Expected life (in years)	4.3	4.1
Expected dividend yield	1.3% - 2.3%	1.6% - 2.1%

The expected volatility was based on historical volatility for a period equal to the award’s expected life.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.  The expected life (estimated period of time outstanding) was estimated using the historical exercise behavior of employees.  The expected dividend yield is based on the current dividend payout activity and the market price of the Company’s stock.

Stock Options and SARs

The right to exercise stock options and SARs generally vest over four years from the date of grant, with 25% vesting at the end of each of the first four years following the date of grant.  Stock options and SARs are settled by issuance of common stock.  Options issued prior to January 29, 2005 will generally expire, if not exercised, within ten years from the date of the grant, while stock options and SARs granted after that date generally expire, if not exercised, within seven years from the date of grant.  The weighted average grant date fair value for SARs granted during the thirty-nine weeks ended October 30, 2010 and October 31, 2009 was $6.74 and $4.02, respectively.

8

Table of Contents

The following table summarizes information about stock options and SARs outstanding under the Equity Incentive Plans as of October 30, 2010 and changes during the thirty-nine weeks ended October 30, 2010:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value  (in thousands)
Outstanding at January 30, 2010		4,624,440		$	14.03
Granted		1,008,000			14.65
Exercised		(677,220	)		7.36
Forfeited		(535,152	)		16.80
Outstanding at October 30, 2010		4,420,068		$	14.85		4.3	$	5,613
Vested or expected to vest at October 30, 2010		4,006,005		$	14.99		4.1	$	5,067
Exercisable at October 30, 2010		2,349,753		$	15.97		3.1	$	2,886

The following table summarizes information about non-vested stock option awards and SARs outstanding as of October 30, 2010 and changes during the thirty-nine weeks ended October 30, 2010:

Stock Options/SARs	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at January 30, 2010		1,902,848		$	4.86
Granted		1,008,000			6.74
Vested		(655,158	)		5.45
Forfeited		(185,375	)		5.32
Non-vested at October 30, 2010		2,070,315		$	5.55

The aggregate intrinsic value of stock options and SARs, defined as the amount by which the market price of the underlying stock on the date of exercise exceeds the exercise price of the award, exercised during the thirty-nine weeks ended October 30, 2010 and October 31, 2009 was $5.2 million and $0.3 million, respectively.

Non-vested Stock

The Company has granted shares of non-vested stock to members of management and independent directors.  The non-vested stock converts one for one to common stock at the end of the vesting period at no cost to the recipient to whom it is awarded.

9

Table of Contents

The following table summarizes information about non-vested stock granted by the Company as of October 30, 2010 and changes during the thirty-nine weeks ended October 30, 2010:

Non-vested Stock	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 30, 2010		208,221		$	13.51
Granted		133,571			12.48
Vested		(52,513	)		18.28
Forfeited		(15,513	)		14.00
Outstanding at October 30, 2010		273,766		$	12.07

The aggregate intrinsic value of non-vested stock that vested during the current year was $0.7 million.  The payment of the employees’ tax liability for a portion of the vested shares was satisfied by withholding shares with a fair value equal to the tax liability.  As a result, the actual number of shares issued was 51,513.

Performance Shares

The Company has granted performance shares to members of senior management, at no cost to the recipient, as a means of rewarding them for the Company’s long-term performance based on shareholder return performance measures.  The actual number of shares that could be issued ranges from zero to a maximum of two times the number of granted shares outstanding as reflected in the table below.  The actual number of shares issued is determined by the Company’s shareholder return performance relative to a specific group of companies over a three-year performance cycle.  Compensation expense, which is recorded ratably over the vesting period, is based on the fair value at grant date and the anticipated number of shares of the Company’s common s tock, which is determined on a Monte Carlo probability model.  Grant recipients do not have any shareholder rights until the granted shares have been issued.

The following table summarizes information about the performance shares that remain outstanding as of October 30, 2010:

								Weighted
								Average
	Target		Target			Target		Grant Date
Period	Shares		Shares			Shares		Fair Value per
Granted	Granted		Forfeited			Outstanding		Share
2008		115,000		(36,000	)		79,000	$	24.53
2009		137,500		(19,000	)		118,500		12.79
2010		138,000		-			138,000		19.75
Total		390,500		(55,000	)		335,500

During the current year, 18,745 shares, with an aggregate intrinsic value of $0.3 million, vested related to the 2007 performance share grant.  The payment of the recipients’ tax liability of approximately $0.1 million was satisfied by withholding shares with a fair value equal to the tax liability.  As a result, the actual number of shares issued was 13,788.

10

Table of Contents

3.           Debt Obligations

Debt obligations as of October 30, 2010 and January 30, 2010 consist of the following (in thousands):

	October 30, 2010		January 30, 2010
Equipment financing	$	33,975	$	43,032
Finance lease obligations		7,769		8,186
Total debt obligations		41,744		51,218
Less: Current portion of debt obligations		13,295		12,726
Long-term debt obligations	$	28,449	$	38,492

           The Company has a $250.0 million senior secured revolving credit facility (the "Revolving Credit Facility") that matures on April 20, 2012.  The Revolving Credit Facility includes an uncommitted accordion feature to increase the size of the facility to $350.0 million.  Borrowings under the Revolving Credit Facility are limited to the availability under a borrowing base that is determined principally on eligible inventory as defined by the Revolving Credit Facility agreement.  The daily interest rates under the Revolving Credit Facility are determined by a prime rate, or Eurodollar rate plus an applicable margin, as set forth in the Revolving Credit Facility agreement.  Inventory and cash and cash equivalents are pledged as col lateral under Revolving Credit Facility.  The Revolving Credit Facility is used by the Company to provide financing for working capital, capital expenditures, interest payments and other general corporate purposes, as well as to support its outstanding letters of credit requirements.  For the thirty-nine weeks ended October 30, 2010, there were no borrowings under the Revolving Credit Facility.

The Company also issues letters of credit under its Revolving Credit Facility to support certain merchandise purchases and to collateralize retained risks and deductibles under various insurance programs.  At October 30, 2010, the Company had outstanding letters of credit totaling approximately $11.1 million.  These letters of credit expire within twelve months of issuance.  Excess borrowing availability under the Revolving Credit Facility at October 30, 2010, net of letters of credit outstanding, was $238.8 million.

The Revolving Credit Facility contains covenants which, among other things, restrict, based on required levels of excess availability, (i) the amount of additional debt or capital lease obligations, (ii) the payment of dividends and repurchase of common stock under certain circumstances and (iii) related party transactions.  At October 30, 2010, the Company was in compliance with all of the debt covenants of the Revolving Credit Facility and expects to remain in compliance during fiscal year 2010.

4.           Earnings per Share

Basic earnings per share is computed using the weighted average number of common shares outstanding during the measurement period.  Diluted earnings per share is computed using the weighted average number of common shares and all potentially dilutive common share equivalents outstanding during the measurement period.  For the thirteen weeks ended October 30, 2010 and October 31, 2009, 234,000 and 423,000 shares, respectively, attributable to stock optio ns, SARs and non-vested stock grants would have been considered dilutive securities but were excluded from the calculation of diluted earnings per share because the effect was anti-dilutive due to the net loss for the reported period.  The following table summarizes the components used to determine total diluted shares (in thousands):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 30, 2010		October 31, 2009		October 30, 2010		October 31, 2009
Basic weighted average shares outstanding		37,362		38,084		37,998		38,028
Effect of dilutive securities:
Stock options, SARs and non-vested stock grants		-		-		320		375
Diluted weighted average shares outstanding		37,362		38,084		38,318		38,403

11

The following table illustrates the number of stock options and SARs that were outstanding, but not included in the computation of diluted earnings per share because the exercise price of the stock options and SARs was greater than the average market price of the Company’s common shares (in thousands):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 30, 2010		October 31, 2009		October 30, 2010		October 31, 2009
Number of anti-dilutive stock options and SARs outstanding		3,115		2,617		2,888		2,646

5.           Stockholders’ Equity

 On June 14, 2010, the Company announced that its Board of Directors (the “Board”) approved a 50% increase in the Company’s quarterly cash dividend to 7.5 cents per share from the previous quarterly rate of 5 cents per share.  The new quarterly dividend rate of 7.5 cents per share is applicable to dividends declared after June 23, 2010.  In the current year, the Company has paid cash dividends totaling $6.7 million.  On November 24, 2010, the Company’s Board declared a quarterly cash dividend of 7.5 cents per share of common stock, payable on December 22, 2010 to shareholders of record at the close of business on December 7, 2010.

On August 19, 2010, the Company announced that the Board approved a Stock Repurchase Program which authorizes the Company to repurchase up to $25.0 million of its outstanding common stock (the “2010 Repurchase Program”) from time to time, either on the open market or through privately negotiated transactions.  During the current year third quarter, the Company repurchased 1.7 million shares for approximately $20.4 million using funds available to the Company under the 2010 Repurchase Program.  The Company has approximately $4.6 million remaining under the 2010 Repurchase Program and expects to continue repurchasing shares from time to time as market conditions warrant.  In addition, during the current year second quarter, the Company repurchased a total of 0.5 million shares for approxima tely $6.8 million using proceeds available from the exercise of stock options, as well as the tax benefits that accrue to the Company from the exercise of stock options and SARs and from other equity grants.

6.           Retirement Plan

The Company sponsors a frozen defined benefit plan.  The components of pension cost for each period are as follows (in thousands):

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 30, 2010			October 31, 2009			October 30, 2010			October 31, 2009
Interest cost	$	529		$	580		$	1,587		$	1,741
Expected return on plan assets		(556	)		(501	)		(1,668	)		(1,503	)
Net loss amortization		107			130			320			390
Net periodic pension cost	$	80		$	209		$	239		$	628

The Company’s funding policy is to make contributions to maintain the minimum funding requirements for its pension obligations in accordance with the Employee Retirement Income Security Act.  The Company may elect to contribute additional amounts to maintain a level of funding to minimize the Pension Benefit Guaranty Corporation premium costs or to cover the short-term liquidity needs of the plan in order to maintain current invested positions.  During the current year, the Company contributed $1.4 million to the pension plan and may make additional contributions during the remainder of the year.

7.           Fair Value Measurements

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company assumes

12

the highest and best use of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability.

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are both unobservable and significant to the overall fair value measurement reflect the Company’s estimates of assumptions that market participants would use in pricing the asset or liability.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets (Unaudited) as of October 30, 2010 and January 30, 2010, subject to ASC 820, Fair Value Measurements, (in thousands):

	Balance as of		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	October 30, 2010		(Level 1)		(Level 2)		(Level 3)
Other assets:
Securities held in grantor trust for deferred compensation plans (1)(2)	$	15,412	$	15,412	$	-	$	-
Accrued expenses and other current liabilities:
Deferred non-employee director equity compensation plan liability (2)	$	148	$	148	$	-	$	-

	Balance as of		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	January 30, 2010		(Level 1)		(Level 2)		(Level 3)
Other assets:
Securities held in grantor trust for deferred compensation plans (1)(2)	$	13,325	$	13,325	$	-	$	-
Accrued expenses and other current liabilities:
Deferred non-employee director equity compensation plan liability (2)	$	290	$	290	$	-	$	-

(1)   The Company has recorded in other long-term liabilities amounts related to these assets for the amount due to participants corresponding in value to the securities held in the grantor trust.

(2)   Using the market approach,the fair values of these items represent quoted market prices multiplied by the quantities held.  Net gains and losses related to the changes in fair value in the assets and liabilities under the various deferred compensation plans are recorded in selling, general and administrative expenses and were approximately nil for the thirty-nine weeks ended October 30, 2010 and for the fiscal year ended January 30, 2010, respectively.

13

The Company adopted the required provisions of ASC 820 for nonfinancial assets and nonfinancial liabilities as of February 1, 2009.  The Company performed a review of the performance of its stores during the second quarter using an undiscounted cash flow model.  The Company identified certain stores whose cash flow trends indicated that the carrying value of store property, equipment and leasehold improvements may not be fully recoverable and determined that impairment charges were necessary for the current year.  Key assumptions in determining future cash flows include, among other things, expected future operating performance and changes in economic conditions.  Store property, equipment and leasehold impr ovements are recorded at cost, which is the fair value at the acquisition date.

The following table shows the Company’s nonfinancial assets measured at fair value on a nonrecurring basis in the Condensed Consolidated Balance Sheets (Unaudited) as of October 30, 2010, subject to ASC 820 (in thousands):

	Balance as of		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
	October 30, 2010		(Level 1)		(Level 2)		(Level 3)
Assets:
Store property, equipment and leasehold improvements (1)	$	7,076	$	-	$	-	$	7,076

(1)   In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, store property, equipment and leasehold improvements with a carrying amount of $9.7 million were written down to their fair market value of $7.1 million, resulting in impairment charges of $2.6 million during the current year which are included in cost of sales and related buying, occupancy and distribution expenses in the Condensed Consolidated Statement of Operations (Unaudited).

Financial instruments not measured at fair value are cash and cash equivalents, payables and debt obligations.  At October 30, 2010, the Company believes that the carrying amount of debt obligations approximates fair value based on recent financing transactions for similar debt issuances.  The Company also believes that the Revolving Credit Facility approximates fair value since interest rates are adjusted to reflect current rates.    

14

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Certain statements in this Form 10-Q contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.  Forward-looking statements reflect the Company’s expectations regarding future events and operating performance and often contain words such as "believe," "expect," "may," "will," "should," "could," "anticipate," "plan" or similar words.

Forward-looking statements are based on various assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements.  These factors include, but are not limited to, the ability of the Company and its subsidiary to maintain normal trade terms with vendors, the ability of the Company and its subsidiary to comply with the various covenant requirements contained in the Company's Revolving Credit Facility, the demand for apparel, and other factors.  The demand for apparel and sales volume can be affected by significant changes in economic conditions, including an economic downturn, employment levels in the Company’s markets, consumer confidence, energy and gasoline prices and other factors influencing discret ionary consumer spending.  Other factors affecting the demand for apparel and sales volume include unusual weather patterns, an increase in the level of competition in the Company's market areas, competitors' marketing strategies, changes in fashion trends, changes in the average cost of merchandise purchased for resale, availability of product on normal payment terms and the failure to achieve the expected results of the Company's merchandising and marketing plans as well as its store opening plans. The occurrence of any of these factors could have a material and adverse impact on the Company’s business, financial condition, operating results, or liquidity. Most of these factors are difficult to predict accurately and are generally beyond the Company’s control.

Readers should consider the risks and uncertainties described in the Company’s Annual Report on Form 10-K for the year ended January 30, 2010 (“Form 10-K”).  Readers should carefully review the Form 10-K in its entirety including, but not limited to, the Company's financial statements and the notes thereto and the risks and uncertainties described in Item 1A - "Risk Factors" of the Form 10-K.  Forward-looking statements contained in this Form 10-Q are as of the date of this Form 10-Q.  The Company does not undertake to update its forward-looking statements.

General

Stage Stores is a Houston, Texas-based specialty department store retailer offering moderately priced, nationally recognized brand name and private label apparel, accessories, cosmetics and footwear for the entire family. The Company's principal focus is on consumers in small and mid-sized markets which the Company believes are under-served and less competitive.  The Company differentiates itself from the competition in the small and mid-sized communities by offering consumers access to basic as well as fashionable brand name merchandise not typically carried by other retailers in the same market area.  In the highly competitive metropolitan markets, the Company competes against national department store chains, which similarly offer moderately priced, brand name and private label merchandise.  In these larger metropolitan markets, the Company differentiates itself by offering consumers a high level of customer service in smaller-sized stores in convenient locations as compared to the larger department stores with which it competes. At October 30, 2010, the Company operated 788 stores located in 39 states under the five names of Bealls, Goody’s, Palais Royal, Peebles and Stage.

In July 2009, the Company acquired the “Goody’s” name through the Goody’s bankruptcy auction.  A key component of the Company’s current expansion strategy is to use the Goody’s name in select markets in which there is a strong customer awareness and recognition of the name.  At October 30, 2010, the Company had 62 Goody’s branded stores and expects to rebrand and open an additional 9 Goody’s stores during the last quarter of the current fiscal year.

The financial information, discussion and analysis that follow should be read in conjunction with the Company's Consolidated Financial Statements as included in the Form 10-K.

15

Results of Operations

The following table sets forth the results of operations as a percentage of sales for the periods indicated:

	Thirteen Weeks Ended (1)						Thirty-Nine Weeks Ended (1)
	October 30, 2010			October 31, 2009			October 30, 2010			October 31, 2009
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales and related buying, occupancy
and distribution expenses		76.9			77.4			73.4			74.2
Gross profit		23.1			22.6			26.6			25.8
Selling, general and administrative expenses		26.2			25.6			25.3			25.1
Store opening costs		0.4			0.4			0.3			0.3
Interest expense, net		0.3			0.3			0.3			0.3
(Loss) income before income tax		(3.7	)		(3.7	)		0.7			0.1
Income tax (benefit) expense		(1.7	)		(1.4	)		0.2			0.0
Net (loss) income		(2.1	)  %		(2.3	)  %		0.6	%		0.1	%
(1)  Percentages may not foot due to rounding.

Thirteen Weeks Ended October 30, 2010 Compared to Thirteen Weeks Ended October 31, 2009

Sales for the thirteen weeks ended October 30, 2010 (the “current year third quarter”) increased 2.1% to $331.8 million from $324.9 million for the thirteen weeks ended October 31, 2009 (the “prior year third quarter”).

The sales increase was driven by the strength of the Company’s new stores, as comparable store sales, which are sales in stores that are open for at least 14 full months prior to the reporting period, decreased by 0.3% in the current year third quarter as compared to a 5.4% decrease in the prior year third quarter.  In the current year third quarter, new stores that were not in the comparable store base contributed sales of $8.1 million partly offset by a decline in comparable store sales of $0.8 million and loss of $0.4 million in sales from closed stores that were in operation during the prior year third quarter.  The 0.3% decline in comparable store sales for the current year third quarter reflects a combination of a 7.9% increase in transactions, offset by decreases in average unit retail and units p er transaction of 5.7% and 2.5%, respectively.

The Company considers its private label credit card program an important component of its retailing concept.  Trends in delinquency rates, average balances and credit limits provide insight into the financial condition of the Company’s core customers, particularly in times of difficult macroeconomic conditions.  During the current year third quarter, the 90 day and older delinquency rates for the Company’s private label credit card program improved as compared to the prior year third quarter.  Though the private label credit card sales penetration decreased by 1.9% as compared to the prior year third quarter, new accounts opened in the current year third quarter increased by 23.1% compared to the prior year third quarter.   

Regionally, the South East, South West, Mid West and North East regions had comparable store sales gains during the current year third quarter.  The South Central region, which is comprised of Texas, Louisiana, Oklahoma and Arkansas, was the Company’s weakest performing region during the current year third quarter.  

With regard to comparable store sales by market size, the Company’s small markets (populations less than 50,000) outperformed stores in its mid-sized (populations of 50,000 to 150,000) and large markets (populations greater than 150,000).  Comparable store sales in the Company’s small markets increased 1.6% and continue to be the focus of the Company’s new stores expansion plans.

16

Key merchandise categories (i.e., those categories comprising greater than 5% of sales), which outperformed the Company’s current year third quarter average comparable store sales level, were footwear, cosmetics, accessories and juniors.  The Company continues to focus on growing its cosmetics line of business through the installation of Estee Lauder and Clinique counters, as two new Estee Lauder and two new Clinique counters were opened during the current year third quarter, which raised the total number of counters to 176 and 169, respectively.

The following is a summary of the changes in the components of cost of sales between the current year third quarter and the prior year third quarter, expressed as a percent of sales:

	Q3 Increase/ (Decrease)
Merchandise cost of sales		0.1	%
Buying, occupancy and distribution expenses		(0.6	)
Decrease in merchandise cost of sales and related buying,
occupancy and distribution expenses rate		(0.5	) %

Gross profit increased 4.1% to $76.6 million for the current year third quarter from $73.5 million in the prior year third quarter.  Gross profit, as a percent of sales, increased to 23.1% in the current year third quarter from 22.6% in the prior year third quarter.  The increase in gross profit dollars is due to both increased sales and a 0.5% lower cost of sales rate in the current year third quarter.  The increase in the merchandise cost of sales rate is a result of higher sales of clearance merchandise in the current year third quarter and a more promotional environment.  The decrease in the buying, occupancy and distribution expense rate reflects both improved leverage from higher sales and lower buying, occupancy and distribution expense s

Selling, general and administrative (“SG&A”) expenses in the current year third quarter increased by $3.6 million, or 4.3%, to $86.8 million from $83.2 million in the prior year third quarter.  As a percent of sales, SG&A expenses increased to 26.2% in the current year third quarter from 25.6% in the prior year third quarter.  The Company operated 30 net additional stores at the end of the current year third quarter as compared to the end of the prior year third quarter.  The increase in SG&A expenses is primarily due to higher store payroll, utility and advertising costs.

Store opening costs of $1.2 million in the current year third quarter include costs related to the opening of 12 new stores during the current year third quarter.  During the prior year third quarter, the Company incurred $1.2 million in store opening costs related to 16 new stores opened.  Store opening costs are expensed as incurred and include costs of stores opening in future quarters.

Net interest expense was $0.9 million in the current year third quarter compared to $1.1 million in the prior year third quarter.  Interest expense is primarily comprised of interest on borrowings under the Revolving Credit Facility (see “Liquidity and Capital Resources”), related letters of credit and commitment fees, amortization of debt issue costs, interest on finance lease obligations and equipment financing notes.  The decrease in interest expense is primarily due to a lower average amount of equipment financing notes in the current year third quarter.  The weighted average balance on the Company’s equipment financing notes outstanding was $34.9 million in the current year third quarter as compared to $42.8 million in the prior y ear third quarter.

The Company’s effective tax rate for the current year third quarter was 44.5%, resulting in a tax benefit of $5.5 million.  This compares to an income tax benefit of $4.6 million in the prior year third quarter during which the effective tax rate was 38.6%.  The current year third quarter benefited from reductions in the estimates of state income taxes and deferred income taxes of approximately $0.8 million.  The effective tax rate for the fourth quarter is expected to be approximately 38.0%.

As a result of the foregoing, the Company had a net loss of $6.9 million for the current year third quarter as compared to a net loss of $7.3 million for the prior year third quarter.

17

Thirty-Nine Weeks Ended October 30, 2010 Compared to Thirty-Nine Weeks Ended October 31, 2009

Sales for the thirty-nine weeks ended October 30, 2010 (the “current year”) increased 1.7% to $1,016.9 million from $1,000.2 million for the thirty-nine weeks ended October 31, 2009 (the “prior year”).

The sales increase was driven by the strength of the Company’s new stores, as comparable store sales, which are sales in stores that are open for at least 14 full months prior to the reporting period, decreased by 0.9% in the current year as compared to an 8.4% decrease in the prior year.  In the current year, new stores that were not in the comparable store base contributed sales of $29.5 million, partially offset by a decline in comparable store sales of $8.4 million and loss of $4.4 million in sales from closed stores that were in operation during the prior year.  The 0.9% decline in comparable store sales for the current year reflects a combination of a 6.0% increase in transactions, offset by decreases in average unit retail and units per transaction of 4.3% and 2.6%, respectively.

The Company considers its private label credit card program an important component of its retailing concept.  Trends in delinquency rates, average balances and credit limits provide insight into the financial condition of the Company’s core customers, particularly in times of difficult macroeconomic conditions.  During the current year, the 90 day and older delinquency rates for the Company’s private label credit card program improved as compared to the prior year.  Though the private label credit card sales penetration decreased by 1.7% as compared to the prior year, new accounts opened in the current year increased by 21.9% compared to the prior year.  

Regionally, the Mid Atlantic, South East, South West, Mid West and North East regions had comparable store sales gains during the current year.  The South Central region, which is comprised of Texas, Louisiana, Oklahoma and Arkansas, was the Company’s weakest performing region.  

With regard to comparable store sales by market size, the Company’s small markets (populations less than 50,000) outperformed stores in its mid-sized markets (populations of 50,000 to 150,000) and large markets (populations greater than 150,000).  Comparable store sales in the Company’s small markets increased 2.0% and continue to be the focus of the Company’s new stores expansion plans.

Key merchandise categories (i.e., those categories comprising greater than 5% of sales), which outperformed the Company’s current year average comparable store sales level, were footwear, children’s, cosmetics, accessories, juniors and young men’s.  The Company continues to focus on growing its cosmetics line of business through the installation of Estee Lauder and Clinique counters, as eight new Estee Lauder and seventeen new Clinique counters were opened during the current year, which raised the total number of counters to 176 and 169, respectively.

The following is a summary of the changes in the components of cost of sales between the current year and the prior year, expressed as a percent of sales:

	YTD Decrease
Merchandise cost of sales		(0.5	) %
Buying, occupancy and distribution expenses		(0.3	)
Decrease in merchandise cost of sales and related buying,
occupancy and distribution expenses rate		(0.8	) %

Gross profit increased 4.8% to $270.6 million for the current year from $258.2 million in the prior year.  Gross profit, as a percent of sales, was 26.6% in the current year and 25.8% in the prior year.  The decrease in merchandise cost of sales rate benefited from lower freight and shrink expense.  The decrease in the buying, occupancy and distribution expense rate is primarily due to leverage from higher sales, lower occupancy and distribution costs, offset by higher store depreciation expense which related to higher store impairment charges as compared to the prior year.

18

SG&A expenses in the current year increased by $6.3 million, or 2.5%, to $257.0 million from $250.7 million in the prior year.  As a percent of sales, the current year SG&A rate increased to 25.3% in the current year from 25.1% in the prior year.  The Company operated 30 net additional stores at the end of the current year as compared to prior year.  The increase in SG&A expenses was primarily driven by higher store payroll, utility, relocation and advertising costs.

Store opening costs of $3.0 million in the current year include costs related to the opening of 32 new stores, a reopened tornado-damaged store and the relocation of 2 stores.  During the prior year, the Company incurred $2.8 million in store opening costs related to the opening of 26 new stores, a reopened hurricane-damaged store and the relocation of 9 stores.  Store opening costs are expensed as incurred and include costs of stores opening in future quarters.

Net interest expense was $3.0 million in the current year compared to $3.4 million in the prior year.  Interest expense is primarily comprised of interest on borrowings under the Revolving Credit Facility (see “Liquidity and Capital Resources”), related letters of credit and commitment fees, amortization of debt issue costs, interest on finance lease obligations and equipment financing notes.  The decrease in interest expense is due to having no borrowings on the Revolving Credit Facility in the current year, as compared to a weighted average Revolving Credit Facility balance of $0.7 million in the prior year, coupled with a lower average amount of equipment financing notes in the current year.  The weighted average balance on the Company 217;s equipment financing notes outstanding was $37.9 million in the current year as compared to $45.5 million in the prior year.

The Company’s effective tax rate for the current year was 25.5%, which resulted in tax expense of $1.9 million.  This compares to income tax expense of $0.5 million in the prior year during which the effective tax rate was 35.3%.  The current year benefited from reductions in the estimates of state income taxes and deferred income taxes of approximately $1.0 million.  The effective tax rate for the fourth quarter is expected to be approximately 38.0%.

As a result of the foregoing, the Company had net income of $5.7 million for the current year as compared to net income of $0.9 million for the prior year.

Seasonality and Inflation

Historically, the Company's business is seasonal and sales are traditionally lower during the first three quarters of the fiscal year (February through October) and higher during the last quarter of the fiscal year (November through January).  The fourth quarter usually accounts for slightly more than 30% of the Company's annual sales, with the other quarters accounting for approximately 22% to 24% each.  Working capital requirements fluctuate during the year and generally reach their highest levels during the third and fourth quarters.  The Company does not believe that inflation had a material effect on its results of operations during the thirty-nine weeks ended October 30, 2010 and October 31, 2009, respectively.  However, there can be no assur ance that the Company's business will not be affected by inflation in the future.

Liquidity and Capital Resources

The Company's liquidity is currently provided by (i) existing cash balances, (ii) operating cash flows, (iii) normal trade credit terms from the vendor and factor community, (iv) equipment financing and (v) its Revolving Credit Facility.  The Company’s primary cash requirements are for capital expenditures related to new stores, store relocations and remodeling, and seasonal and new store inventory purchases.

19

Table of Contents

Key components of the Company’s cash flows for the current year and the prior year are summarized below (in thousands):

	Thirty-Nine Weeks Ended
	October 30, 2010			October 31, 2009
Net cash provided by (used in):
Operating activities	$	16,318		$	66,938
Investing activities		(28,049	)		(35,532	)
Financing activities		(36,507	)		(12,201	)

Operating Activities

During the current year, the Company generated $16.3 million in cash from operating activities.  Net income, adjusted for non-cash expenses, provided cash of approximately $56.3 million.  Changes in operating assets and liabilities used net cash of approximately $45.2 million, which included a $113.7 million increase in merchandise inventories due to the seasonal build in inventories and a $4.5 million increase in other assets, offset by an increase in accounts payable and other liabilities of $73.0 million.  Additionally, cash flows from operating activities included construction allowances from landlords of $5.2 million, which funded a portion of the capital expenditures related to store leasehold improvements in new and relocated stores.

During the prior year, the Company generated $66.9 million in cash from operating activities.  Net income, adjusted for non-cash expenses, provided cash of approximately $51.7 million.  Changes in operating assets and liabilities provided net cash of approximately $11.7 million, which included a $64.8 million increase in merchandise inventories and a $2.1 million decrease in other assets.  Accounts payable and other liabilities increased $74.4 million.  Additionally, cash flows from operating activities included construction allowances from landlords of $3.5 million, which funded a portion of the capital expenditures related to store leasehold improvements in new and relocated stores.

Investing Activities

Capital expenditures were $28.0 million in the current year as compared to $36.1 million in the prior year.  For the current year, the Company opened 32 new stores, reopened a tornado-damaged store and relocated 2 stores, as compared to 26 new stores, a reopened hurricane-damaged store and 9 stores relocated in the prior year.  As noted above, the Company received construction allowances from landlords of $5.2 million in the current year to fund a portion of the capital expenditures related to store leasehold improvements in new and relocated stores, while $3.5 million was received from landlords in the prior year.  These funds have been recorded as a deferred rent credit in the balance sheet and will be recorded as an offset to rent expense over the le ase term commencing with the date the allowances were earned.

Management currently estimates that capital expenditures in 2010, net of construction allowances to be received from landlords, will be approximately $35.0 million.  The expenditures will principally be for the opening of new stores, store expansions, store relocations and store remodels.

Financing Activities

The Company has a $250.0 million senior secured revolving credit facility (the "Revolving Credit Facility") that matures on April 20, 2012.  The Revolving Credit Facility includes an uncommitted accordion feature to increase the size of the facility to $350.0 million.  Borrowings under the Revolving Credit Facility are limited to the availability under a borrowing base that is determined principally on eligible inventory as defined by the Revolving Credit Facility agreement.  The daily interest rates under the Revolving Credit Facility are determined by a prime rate, or Eurodollar rate plus an applicable margin, as set forth in the Revolving Credit Facility agreement.  Inventory and cash and cash equivalents are pledged as collateral under the Revolving Credit Facility.  The Revolving Credit Facility is used by the Company to provide financing for working capital, capital expenditures, interest payments and other general corporate

20

 purposes, as well as to support its outstanding letters of credit requirements.  For the thirty-nine weeks ended October 30, 2010, there were no borrowings under the Revolving Credit Facility.

The Company also issues letters of credit under its Revolving Credit Facility to support certain merchandise purchases and to collateralize retained risks and deductibles under various insurance programs.  At October 30, 2010, the Company had outstanding letters of credit totaling approximately $11.1 million.  These letters of credit expire within twelve months of issuance.  Excess borrowing availability under the Revolving Credit Facility at October 30, 2010, net of letters of credit outstanding, was $238.8 million.

The Revolving Credit Facility contains covenants which, among other things, restrict, based on required levels of excess availability, (i) the amount of additional debt or capital lease obligations, (ii) the payment of dividends and repurchase of common stock under certain circumstances and (iii) related party transactions.  At October 30, 2010, the Company was in compliance with all of the debt covenants of the Revolving Credit Facility and expects to remain in compliance during fiscal year 2010.

 On June 14, 2010, the Company announced that its Board of Directors (the “Board”) approved a 50% increase in the Company’s quarterly cash dividend to 7.5 cents per share from the previous quarterly rate of 5 cents per share.  The new quarterly dividend rate of 7.5 cents per share is applicable to dividends declared after June 23, 2010.  In the current year, the Company has paid cash dividends totaling $6.7 million.  On November 24, 2010, the Company’s Board declared a quarterly cash dividend of 7.5 cents per share of common stock, payable on December 22, 2010 to shareholders of record at the close of business on December 7, 2010.

On August 19, 2010, the Company announced that the Board approved a Stock Repurchase Program which authorizes the Company to repurchase up to $25.0 million of its outstanding common stock (the “2010 Repurchase Program”) from time to time, either on the open market or through privately negotiated transactions.  During the current year third quarter, the Company repurchased 1.7 million shares for approximately $20.4 million using funds available to the Company under the 2010 Repurchase Program.  The Company has approximately $4.6 million remaining under the 2010 Repurchase Program and expects to continue repurchasing shares from time to time as market conditions warrant.  In addition, during the current year second quarter, the Company repurchased a total of 0.5 million shares for approxima tely $6.8 million using proceeds available from the exercise of stock options, as well as the tax benefits that accrue to the Company from the exercise of stock options and SARs and from other equity grants.

While there can be no assurances, management believes that there should be sufficient liquidity to cover both the Company's short-term and long-term funding needs.  The Company anticipates that it has adequate cash flows to cover its working capital needs, planned capital expenditures and debt service requirements for the remainder of 2010 and the foreseeable future.

Recent Accounting Standards

Disclosure concerning recent accounting standards is incorporated by reference to Note 1 of the Company's Condensed Consolidated Financial Statements (Unaudited) contained in this Form 10-Q.

ITEM 3.                  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4.                  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules

21

and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures.  Based on this evaluation, they concluded that the Company’s disclosure controls and procedures were effective as of October 30, 2010.

Internal Control Over Financial Reporting

As defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act, the term "internal control over financial reporting" means a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material adverse effect on the financial statements.

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  There were no changes in the Company’s internal control over financial reporting during the quarter ended October 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.                  LEGAL PROCEEDINGS

During the current year third quarter ended October 30, 2010, the Company did not have any material legal proceedings brought against it, its subsidiary or their properties.

ITEM 1A.               RISK FACTORS

There have not been any material changes from the risk factors as previously disclosed in the Form 10-K.

22

Table of Contents

ITEM 2.                  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS          

On August 19, 2010, the Company announced that its Board of Directors approved a new Stock Repurchase Program which authorizes the Company to repurchase up to $25.0 million of its outstanding common stock (the “2010 Repurchase Program”) from time to time, either on the open market or through privately negotiated transactions.  During the current year third quarter, the Company repurchased 1.7 million shares for approximately $20.4 million using funds available to the Company under the 2010 Repurchase Program.  The Company has approximately $4.6 million remaining under the 2010 Repurchase Program and expects to continue repurchasing shares from time to time as market conditions warrant.  The table below sets forth information regarding the Company’s repurchases of its common stock du ring the current year third quarter:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
August 1, 2010 to August 28, 2010		323,649	$	11.42		323,649	$	21,303,919
August 29, 2010 to October 2, 2010		1,202,081		12.31		1,202,081		6,511,479
October 3, 2010 to October 30, 2010		149,576		12.90		149,576		4,581,858
Total		1,675,306	$	12.19		1,675,306

ITEM 3.                  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                  (REMOVED AND RESERVED)

None.

ITEM 5.                  OTHER INFORMATION

None.

ITEM 6.                  EXHIBITS

The following documents are the exhibits to this Form 10-Q.  For convenient reference, each exhibit is listed according to the Exhibit Table of Item 601 of Regulation S-K.

Exhibit Number	Description
10.1†*	Employment Agreement between Andrew Hall and Stage Stores, Inc. dated August 6, 2010.
10.2†*	Employment Agreement between Richard Maloney and Stage Stores, Inc. dated August 6, 2010.
10.3†*	Employment Agreement between Ronald Lucas and Stage Stores, Inc. dated August 6, 2010.

23

10.4†*	Employment Agreement between Joanne Swartz and Stage Stores, Inc. dated August 6, 2010.
10.5†*	Employment Agreement between Steven Hunter and Stage Stores, Inc. dated August 6, 2010.
10.6†*	Employment Agreement between Robert Bernard and Stage Stores, Inc. dated August 30, 2010.
24.1*	Power of Attorney: Executive Officer (Robert J. Bernard - Section 16 Filer).
24.2*	Power of Attorney: Director (Gabrielle E. Greene - Section 16 Filer).
31.1*	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32*	Certification Pursuant to 18 U.S.C. Section 1350.

_____________________________

† Management contract or compensatory plan or arrangement

* Filed electronically herewith

24

Table of Contents 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STAGE STORES, INC.
December 9, 2010	/s/ Andrew T. Hall
(Date)	Andrew T. Hall
	President and Chief Executive Officer
	(Principal Executive Officer)
December 9, 2010	/s/ Edward J. Record
(Date)	Edward J. Record
	Chief Operating Officer and Chief Financial Officer
	(Principal Financial Officer)

25

EX-10

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (“the Agreement”) is entered into by and between STAGE STORES, INC., a Nevada corporation (the “Company”), and Andrew Hall, an individual (the “Executive”), effective as of August 6, 2010 (the “Effective Date”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide for the continued employment of the Executive from and after the Effective Date, and has determined that it is in the best interests of the Company to appoint the Executive to the position of President and Chief Executive Officer (the “Position”), subject to the terms and conditions of this Agreement; and

WHEREAS, the Executive desires to be appointed to the Position, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.           EMPLOYMENT TERM.  TheCompany hereby appoints the Executive to the Position, and the Executive hereby accepts such employment with the Company and appointment to the Position, subject to the terms and conditions set forth in this Agreement.  Subject to earli er termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of thirty-six (36) months commencing from the Effective Date (the “Initial Term”).  Upon the expiration of the Initial Term or any Renewal Period (as hereafter defined), the term of the Executive’s employment under this Agreement shall automatically be extended for an additional thirty-six (36) month period (a “Renewal Period”), subject to earlier termination in accordance with Section 4 below, unless either the Company or the Executive notifies the other party in writing at least thirty (30) days prior to the expiration of the Initial Term or the then current Renewal Period that the Employment Period (as defined in Section 2) shall not be extended upon such expiration.

1.1           Failure to Extend by Company.  In the event the Company notifies the Executive that the Employment Period shall not be extended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Company without Good Cause (as defined in Section 4.2.2), and the Company and the Executive agree that the Executive shall be entitled to receive the payments described in Section 4.3.

1.2           Failure to Extend by Executive.  In the event the Executive notifies the Company that the Employment Period shall not be extended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Executive without

Good Reason (as defined in Section 4.4.3), and the Company and the Executive agree that the Executive shall be entitled to receive the payments described in Section 4.5.

2.           POSITION AND DUTIES.  During such time as the Executive is employed with the Company (the “Employment Period”), the Executive shall serve in the Position and shall have the normal duties, responsibilities and authority associated with or related to the Position, subject to the power and authority of the Board of the Company to expand or limit such duties, r esponsibilities and authority and to override actions of the Executive.  The Executive shall report to the Board.  The Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and its Subsidiaries (as hereafter defined) and any duty, task or responsibility assigned or given to the Executive by the Board, the Executive shall perform these duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.  As used in this Agreement, “Subsidiaries” shall mean any entity of which the securities having a majority of the voting power in electing directors or managers are, at the time of determination, owned by the Company either directly or through one or more Subsidiaries.

2.1           Outside Directorships.  In the event the Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than the Company or its Subsidiaries, or any religious, charitable, civic or governmental entity or organization), the Executive shall notify the Board in writi ng of the invitation, the entity or organization extending the invitation and the capacity to be served by the Executive for the entity or organization.  The Board shall have the sole power and authority to authorize the Executive to accept the invitation based on such criteria and standards as the Board may determine, and the Executive shall not accept the invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

2.2           Delegation by Board.  Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for the action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and the Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board had taken such action directly.

3.           COMPENSATION AND BENEFITS.  During the Employment Period, the Executive shall be paid or receive compensation and benefits as follows:

3.1           Base Salary.  The base salary for the Executive shall be $800,000 per year, or such other rate as the Board may designate from time to time (the “Base Salary”).  The Base Salary shall be payable in regular installments in accordance with the Company’s gener al payroll practices and shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions. The Executive’s performance shall be evaluated annually in March of each year.  Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

2

3.2           Incentive Compensation.  For any fiscal year ending during the Employment Period, the Board may, but is not obligated to, award incentive compensation to the Executive based upon the Company’s operating results for and the Executive’s performance during such fiscal year and such other performance objectives, targets and criteria for the Executive that the Board may establish and adjust for that fiscal year (the “Incentive Compensation”).  The amount of any Incentive Compensation shall be calculated as a percentage of the Base Salary (current Target Rate is 90% of Base Salary) in effect during that fiscal year, which percentage shall be determined and may be adjusted by the Board (the “Target Rate”) based on such results, performance and objectives.  In addition to such results, performance and objectives, the Board may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during that fiscal year deemed appropriate by the Board in determining any Incentive Compensation.  The Company shall pay to the Executive any approved Incentive Compensation on or before April 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executi ve was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.

3.3           Medical, Dental and Other Benefits.   The Executive shall be eligible to enroll and participate in any and all benefit plans the Company provides to its senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, li fe and disability insurance, retirement plans and deferred compensation plans.  The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans.  The Executive shall receive four (4) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited.  Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement.  All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan d ocument, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

3.4           Automobile Allowance.  The Company shall provide the Executive with an automobile allowance in the amount of $1,000.00 per month to be allocated at the Executive’s discretion, or such other monthly amount designated by the Board, and that allowance shall be payable in regular installments in accordance with the Company’s general payroll practices.< /font>

3

3.5.           Financial Planning Allowance.  The Company shall reimburse the Executive for any expense incurred by the Executive in connection with the preparation of taxes, estate planning or financial counseling (not to include investment fees or related expenses) up to a maximum of $10,000.00 per calendar year, or such other annual amount designated by the Board, which amount may not be carried forward to any subsequent calendar year.  Such expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

3.6           Business Expense.  The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position.  Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to s uch reimbursable expenses.

4.           TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party's ongoing obligations under this Agreement.  Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determi ned in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him under this Agreement from the Company in the event of termination.

4.1           Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

4.1.1           Monies and Payments to the Executive. Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans.  No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement.  The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans.

4.1.2           Disability Defined. For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of

4

the Executive prevents him from the normal performance of his duties as determined by the Board.

4.2           By Company For Good Cause.  Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

4.2.1           Monies and Payments to The Executive.  Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executiv e under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.2.2           Good Cause Defined.  “If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”: (i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction; (ii) a material and significant act of dishonesty by the Executive relating to the Company; (iii) a willful act or failure to act by the Executive that substantially impairs his ability to function as an employee of the Company and/or which substantially and negatively impacts the Board’s confidence and trust in the Executive (in the Board’s reasonable discretion); or (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board  within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive.”

4.3           By Company Without Good Cause.  Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

4.3.1           Monies and Benefits to The Executive.  Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims as des cribed in Section 4.7, (ii) two (2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.3.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in

5

accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twenty-four (24) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v)  payment of outplacement services for the Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.3.2           Payment of Monies and Benefits.  The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Se ction 4.3.1(ii) shall be paid to the Executive in fifty-two (52) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.3.1(iv) shall be provided in ac cordance with the terms of the applicable plans and in compliance with COBRA regulations.  The payment described in Section 4.3.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4           By The Executive for Good Reason.   Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

4.4.1           Monies and Benefits to The Executive.  Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement dur ing such thirty

6

(30) day period; and, subject to his execution of a release of claims as described in Section 4.7, (ii) two (2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which th e Executive is participating as of the date of such termination for a period of twenty-four (24) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.4.2           Payment of Monies and Benefits.  The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.4.1(ii ) shall be paid to the Executive in fifty-two (52) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payment described in Section 4.4.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

7

4.4.3           Good Reason Defined.  For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) materially reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity level from the level in effect on the Effective Date (or some subsequent higher) level put into effect by the Board subsequent to the Effective Date, unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives, (ii) willfully fails to include the Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Company to other executive level executives, (iii) materially reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities, (iv) hires an executive senior to the Executive; or (v) requires the Executive to (A) regularly perform the duti es and responsibilities of the Position at, or (B) relocate the Executive’s principal place of employment to, a location which is more than fifty (50) miles from the location of the Executive’s principal place of employment as of the Effective Date.  Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries.  Further, Good Reason shall not include any of the events or conditions described in items (i), (ii), (iii) or (iv) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executiv e shall continue to work exclusively for the Company during such thirty (30) day cure period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

4.5           By The Executive Without Good Reason.  Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason.  If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

4.5.1           Monies and Benefits to The Executive.  The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no oth er monies or benefits shall be payable or owed to the Executive under this

8

Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.6           By Company Due to Change in Control.  In the event a Change in Control (as hereafter defined) occurs and during the period beginning six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control: (i) this Agreement is terminated by the Company or its successor without Good Cause, or (ii) this Agreement is termina ted by the Executive with Good Reason, the Executive shall be entitled to receive, and the Company or its successor shall be obligated to pay, the monies and benefits described in this Section 4.6, and Sections 4.3 or 4.4 shall not be applicable to such Change in Control or termination.

4.6.1           Monies and Benefits to the Executive.  Upon termination of the Executive’s employment in connection with a Change in Control, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise accrued and unpaid, through the date of such termination of employment, and subject to his execution of a release of claims as described in Section 4.7, (ii) three (3) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of termination at the Target Rate; (iv) continuation of the medical, dental and other benefits described in Section 3.3 under which the Executive is participating as of the date of such Change in Control for a period of thirty-six (36) months from the date of termination provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of the Company for such period with no changes to such benefits or plans,  (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such Change in Control or termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00, and (vi) continuation of the financial planning allowance described in Section 3.5 for a period of thirty-six (36) months from termination. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than as described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.6.2           Payment of Monies and Benefits.  The payments described in Section 4.6.1(i) shall be paid to the Executive in a lump sum on the Company’s or its successor’ next regular payday, if applicable, or within thirty (30) days of the date of termination, whichever is earlier, and shall be subject to withholding for applicable taxes and any other legally require d or previously agreed payroll deductions.  Any payment described in Sections 4.6.1(ii) and (iii) shall be paid to

9

the Executive in a lump sum within thirty (30) days, but no sooner than eight (8) days after the Executive returns an executed copy of any release of claims provided by the Company (provided that such release be delivered to the Executive within seven (7) days or less following termination) and shall be subject to withholdings of applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.6.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payments described in Section 4.6.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from such entity.  The reimbursement of the expenses r elated to Section 4.6.1(vi) shall be made to the Executive in accordance with the Company’s or its successor’s policies and procedures.

4.6.3           Change in Control Defined.   For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred:

(a)  on such date within the 12-month period following the date that any one person, or more than one person acting as a group (as defined in §1.409A 3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities (the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;

EX-10

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into and effective as of this 6th day of August, 2010 (the “Effective Date”)by and between STAGE STORES, INC., a Nevada corporation (the “Company”), and RICHARD MALONEY, an individual (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide for the continued employment of the executive from and after the effective date, and has determined that it is in the best interests of the Company to appoint the Executive to the position of Chief Merchandising Officer (the “Position”), subject to the terms and conditions of this Agreement; and

WHEREAS, the Executive desires to be appointed to the Position, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 1.           EMPLOYMENT.  The Company hereby appoints the Executive to the Position, and the Executive hereby accepts such employment with the Company and appointment to the Position, subject to the terms and conditions set forth in this Agreement.  Subject to earlier termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of thirty-six (36) months commencing from the Effective Date (the “Initial Term”).  Upon the expiration of the Initial Term or any Renewal Period (as hereafter described), the term of Executive’s employment under this Agreement shall automatically be extended for an additional thirty-six (36) month period (a “Renewal Period”), subject to earlier termination in accordance with Section 4 below, unless either the Company or the Executive notifies the other party in writing at least thirty (30) days prior to the expiration of the Initial Term or the then current Renewal Period that the Employment Period (as defined in Section 2) shall not be extended upon such expiration.

1.1           Failure to Extend by Company. In the event the Company notifies the Executive that the Employment Period shall not be extended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section  1, such failure to extend shall constitute termination of this Agreement by the Company without Good Cause (as defined in Section 4.2.2), and the Company and the Executive agree that the  Executive shall be entitled to receive the payments described in Section 4.3.

1.2           Failure to Extend by Executive.  In the event the Executive notifies the Company that the Employment Period shall not be extended at the expiration of the Initial term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Executive without Good Reason (as defined in section 4 .4.3), and the Company and the Executive agree that Executive shall be entitled to receive the payments described in Section 4.5.

 2.           POSITION AND DUTIES.  During such time as Executive is employed with the Company (the “Employment Period”), the Executive shall serve in the Position and shall have the normal duties, responsibilities and authority associated with or related to such Position, subject to the power and authority of the Board and execu tive officers of the Company to expand or limit such duties, responsibilities and authority and to override actions of the Executive.  The Executive shall report to the Board and Executive Management of the Company.  The Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and its Subsidiaries (as hereafter defined) and any duty, task or responsibility assigned or given to the Executive by the Board, and the Executive shall perform these duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. As used in this Agreement, “Subsidiaries” shall mean any entity of which the securities having a majority of the voting power in electing directors or managers are, at the time of determination, owned by the Company either directly or through one or mo re Subsidiaries.

2.1           Outside Directorships.  In the event the Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than the Company or its Subsidiaries, or any religious, charitable, civic or governmental entity organization), the Executive shall notify the Board in writing of such invitation, the entity or organization extending the invitation and the capacity to be served by the Executive for such entity or organization.  The Board shall have the sole power and authority to authorize the Executive to accept such invitation based on such criteria and standards as the Board may determine, and the Executive shall not accept such invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

2.2           Delegation by Board.  Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for the action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and the Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board had taken such action directly.

 3.           COMPENSATION AND BENEFITS.  During the Employment Period, Executive shall be paid or receive compensation and benefits as follows:

3.1           Base Salary.  The base salary for the Executive shall be $550,000 per year, or such other rate as the Board may designate from time to time (the “Base Salary”).  The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to withholdings for applicable taxes and o ther legally-required or previously-agreed payroll deductions.  The Executive’s performance shall be evaluated annually in March of each year.  Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

2

3.2           Incentive Compensation.  For any fiscal year ending during the Employment Period, the Board may, but is not obligated to, award incentive compensation to the Executive based upon the Company’s operating results for and the Executive’s performance during such fiscal year and such other performance objectives, targets and criteria for the Executive that the Board may establish and adjust for that fiscal year (the “Incentive Compensation”).  The amount of any Incentive Compensation shall be calculated as a percentage of the Base Salary (current Target Rate is 70% of Base Salary) in effect during that fiscal year, which percentage shall be determined and may be adjusted by the Board (the “Target Rate”) based on such results, performance and objectives.  In addition to such results, performance and objectives, the Board may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during that fiscal year deemed appropriate by the Board in determining any Incentive Compensation.  The Company shall pay to the Executive any approved Incentive Compensation on or around April 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executi ve was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.

3.3           Medical, Dental and Other Benefits.   The Executive shall be eligible to enroll and participate in any and all benefit plans the Company provides to its senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, li fe and disability insurance, retirement plans and deferred compensation plans.  The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans.  The Executive shall receive four (4) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited.  Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement.  All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan d ocument, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

3.4           Automobile Allowance.  The Company shall provide the Executive with an automobile allowance in the amount of $1,000.00 per month to be allocated at the Executive’s discretion, or such other monthly amount designated by the Board, and that allowance shall be payable in regular installments in accordance with the Company’s general payroll practices.< /font>

3

3.5.           Financial Planning Allowance.  The Company shall reimburse the Executive for any expense incurred by the Executive in connection with the preparation of taxes, estate planning or financial counseling (not to include investment fees or related expenses) up to a maximum of $7,500.00 per calendar year, or such other annual amount designated by the Board, which amount m ay not be carried forward to any subsequent calendar year.  Such expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

3.6           Business Expense.  The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position.  Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to s uch reimbursable expenses.

4.           TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party's ongoing obligations under this Agreement.  Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determi ned in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him under this Agreement from the Company in the event of termination.

4.1           Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

4.1.1           Monies and Payments to the Executive. Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans.  No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement.  The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans.

4.1.2           Disability Defined. For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of

4

the Executive prevents him from the normal performance of his duties as determined by the Board.

4.2           By Company For Good Cause.  Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

4.2.1           Monies and Payments to The Executive.  Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executiv e under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.2.2           Good Cause Defined.  “If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”: (i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction; (ii) a material and significant act of dishonesty by the Executive relating to the Company; (iii) a willful act or failure to act by the Executive that substantially impairs his ability to function as an employee of the Company and/or which substantially and negatively impacts the Board’s confidence and trust in the Executive (in the Board’s reasonable discretion); or (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board  within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive.”

4.3           By Company Without Good Cause.  Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

4.3.1           Monies and Benefits to The Executive.  Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims as des cribed in Section 4.7, (ii) one and one-half (1½) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.3.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in

5

accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of eighteen (18) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v)  payment of outplacement services for the Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to com mence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.3.2           Payment of Monies and Benefits.  The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Se ction 4.3.1(ii) shall be paid to the Executive in thirty-nine (39) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.3.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations.  The payment described in Section 4.3.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4           By The Executive for Good Reason.   Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

4.4.1           Monies and Benefits to The Executive.  Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement dur ing such thirty

6

(30) day period; and, subject to his execution of a release of claims as described in Section 4.7, (ii) one and one-half (1½) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of eighteen (18) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.4.2           Payment of Monies and Benefits.  The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.4.1(ii ) shall be paid to the Executive in thirty-nine (39) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the term s of the applicable plans and in compliance with COBRA regulations. The payment described in Section 4.4.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

7

4.4.3           Good Reason Defined.  For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) materially reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity level from the level in effect on the Effective Date (or some subsequent higher) level put into effect by the Board subsequent to the Effective Date, unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives, (ii) willfully fails to include the Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Company to other executive level executives, (iii) materially reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities, (iv) hires an executive senior to the Executive, or (v) requires the Executive to (A) regularly perform the duties and responsibilities of the Position at, or (B) relocate the Executive’ ;s principal place of employment to, a location which is more than fifty (50) miles from the location of the Executive’s principal place of employment as of the Effective Date.  Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries.  Further, Good Reason shall not include any of the events or conditions described in items (i), (ii), (iii) or (iv) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executive shall continue to work exclusively for the Company during such thirty (30) day cur e period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

4.5           By The Executive Without Good Reason.  Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason.  If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

4.5.1           Monies and Benefits to The Executive.  The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no oth er monies or benefits shall be payable or owed to the Executive under this

8

Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.6           By Company Due to Change in Control.  In the event a Change in Control (as hereafter defined) occurs and during the period beginning six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control: (i) this Agreement is terminated by the Company or its successor without Good Cause, or (ii) this Agreement is termina ted by the Executive with Good Reason, the Executive shall be entitled to receive, and the Company or its successor shall be obligated to pay, the monies and benefits described in this Section 4.6, and Sections 4.3 or 4.4 shall not be applicable to such Change in Control or termination.

4.6.1           Monies and Benefits to the Executive.  Upon termination of the Executive’s employment in connection with a Change in Control, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise accrued and unpaid, through the date of such termination of employment, and subject to his execution of a release of claims as described in Section 4.7, (ii) three (3) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of termination at the Target Rate; (iv) continuation of the medical, dental and other benefits described in Section 3.3 under which the Executive is participating as of the date of such Change in Control for a period of thirty-six (36) months from the date of termination provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of the Company for such period with no changes to such benefits or plans, (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such Change in Control or termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00, and (vi) continuation of the financial planning allowance described in Section 3.5 for a period of thirty-six (36) months from termination. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than as described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.6.2           Payment of Monies and Benefits.  The payments described in Section 4.6.1(i) shall be paid to the Executive in a lump sum on the Company’s or its successor’ next regular payday, if applicable, or within thirty (30) days of the date of termination, whichever is earlier, and shall be subject to withholding for applicable taxes and any other legally require d or previously agreed payroll deductions.  Any payment described in Sections 4.6.1(ii) and (iii) shall be paid to

9

the Executive in a lump sum within thirty (30) days, but no sooner than eight (8) days after the Executive returns an executed copy of any release of claims provided by the Company (provided that such release be delivered to the Executive within seven (7) days or less following termination) and shall be subject to withholdings of applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.6.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payments described in Section 4.6.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from such entity.  The reimbursement of the expenses r elated to Section 4.6.1(vi) shall be made to the Executive in accordance with the Company’s or its successor’s policies and procedures.

4.6.3           Change in Control Defined.   For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred:

(a)  on such date within the 12-month period following the date that any one person, or more than one person acting as a group (as defined in §1.409A 3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities (the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;

EX-10

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into and effective as of this 6th day of August, 2010 (the “effective Date”) by and between STAGE STORES, INC., a Nevada corporation (the “Company”), and RONALD LUCAS, an individual (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide for the continued employment of the executive from and after the effective date, and has determined that it is in the best interests of the Company to appoint the Executive to the position of Executive Vice President, Human Resources (the “Position”), subject to the terms and conditions of this Agreement; and

WHEREAS, the Executive desires to be appointed to the Position, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1.          EMPLOYMENT.  The Company hereby appoints the Executive to the Position, and the Executive hereby accepts such employment with the Company and appointment to the Position, subject to the terms and conditions set forth in this Agreement.&# 160; Subject to earlier termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of thirty-six (36) months commencing from the Effective Date (the “Initial Term”).  Upon the expiration of the Initial Term or any Renewal Period (as hereafter described), the term of the Executive’s employment under this Agreement shall automatically be extended for an additional thirty-six (36) month period (a “Renewal Period”), subject to earlier termination in accordance with Section 4 below, unless either the Company or the Executive notifies the other party in writing at least thirty (30) days prior to the expiration of the Initial Term or the then current Renewal Period that the Employment Period (as defined in Section 2) shall not be extended upon such expiration.

1.1           Failure to Extend by Company. In the event the Company notifies the Executive that the Employment Period shall not be extended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section  1, such failure to extend shall constitute termination of this Agreement by the Company without Good Cause (as defined in Section 4.2.2), and the Company and the Executive agree that the  Executive shall be entitled to receive the payments described in Section 4.3.

1.2           Failure to Extend by Executive.  In the event the Executive notifies the Company that the Employment Period shall not be extended at the expiration of the Initial term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Executive without Good Reason (as defined in section 4 .4.3), and the Company and the Executive agree that Executive shall be entitled to receive the payments described in Section 4.5.

2.          POSITION AND DUTIES.  During such time as Executive is employed with the Company (the “Employment Period”), the Executive shall serve in the Position and shall have the normal duties, responsibilities and authority associated with or related to such Position, subject to the power and authority of the Board and executive officers of the Company to expand or limit such duties, responsibilities and authority and to override actions of the Executive.  The Executive shall report to the Board and Executive Management of the Company.  The Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and its Subsidiaries (as hereafter defined) and any duty, task or responsibility assigned or given to Executive by the Board, and the Executive shall perform these duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. As used in this Agreement, “Subsidiaries” shall mean any entity of which the securities having a majority of the voting power in electing directors or managers are, at the time of determin ation, owned by the Company either directly or through one or more Subsidiaries.

2.1           Outside Directorships.  In the event the Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than the Company or its Subsidiaries, or any religious, charitable, civic or governmental entity organization), the Executive shall notify the Board in writing of such invitation, the entity or organization extending the invitation and the capacity to be served by the Executive for such entity or organization.  The Board shall have the sole power and authority to authorize the Executive to accept such invitation based on such criteria and standards as the Board may determine, and the Executive shall not accept such invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

2.2           Delegation by Board.  Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for the action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and the Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board had taken such action directly.

3.           COMPENSATION AND BENEFITS.  During the Employment Period, Executive shall be paid or receive compensation and benefits as follows:

3.1           Base Salary.  The base salary for the Executive shall be $357,100 per year, or such other rate as the Board may designate from time to time (the “Base Salary”).  The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to withholdings for applicable taxes and o ther legally-required or previously-agreed payroll deductions.  The Executive’s performance shall be evaluated annually in March of each year.  Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

2

3.2           Incentive Compensation.  For any fiscal year ending during the Employment Period, the Board may, but is not obligated to, award incentive compensation to the Executive based upon the Company’s operating results for and the Executive’s performance during such fiscal year and such other performance objectives, targets and criteria for the Executive that the Board may establish and adjust for that fiscal year (the “Incentive Compensation”).  The amount of any Incentive Compensation shall be calculated as a percentage of the Base Salary (current Target Rate is 50% of Base Salary) in effect during that fiscal year, which percentage shall be determined and may be adjusted by the Board (the “Target Rate”) based on such results, performance and objectives.  In addition to such results, performance and objectives, the Board may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during that fiscal year deemed appropriate by the Board in determining any Incentive Compensation.  The Company shall pay to the Executive any approved Incentive Compensation on or around April 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executi ve was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.

3.3           Medical, Dental and Other Benefits.  The Executive shall be eligible to enroll and participate in any and all benefit plans the Company provides to its senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, lif e and disability insurance, retirement plans and deferred compensation plans.  The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans.  The Executive shall receive four (4) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited.  Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement.  All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan do cument, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

3.4           Automobile Allowance.  The Company shall provide the Executive with an automobile allowance in the amount of $1,000.00 per month to be allocated at the Executive’s discretion, or such other monthly amount designated by the Board, and that allowance shall be payable in regular installments in accordance with the Company’s general payroll practices.< /font>

3

3.5.           Financial Planning Allowance.  The Company shall reimburse the Executive for any expense incurred by the Executive in connection with the preparation of taxes, estate planning or financial counseling (not to include investment fees or related expenses) up to a maximum of $5,000.00 per calendar year, or such other annual amount designated by the Board, which amount m ay not be carried forward to any subsequent calendar year.  Such expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

3.6           Business Expense.  The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position.  Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to s uch reimbursable expenses.

4.           TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party's ongoing obligations under this Agreement.  Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determi ned in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him under this Agreement from the Company in the event of termination.

4.1           Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

4.1.1           Monies and Payments to the Executive.  Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Sec tion 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans.  No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement.  The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans.

4.1.2           Disability Defined.  For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of

4

the Executive prevents him from the normal performance of his duties as determined by the Board.

4.2           By Company For Good Cause.  Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

4.2.1           Monies and Payments to The Executive.  Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executiv e under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.2.2           Good Cause Defined.  “If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”: (i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction; (ii) a material and significant act of dishonesty by the Executive relating to the Company; (iii) a willful act or failure to act by the Executive that substantially impairs his ability to function as an employee of the Company and/or which substantially and negatively impacts the Board’s confidence and trust in the Executive (in the Board’s reasonable discretion); or (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board  within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive.”

4.3           By Company Without Good Cause.  Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

4.3.1           Monies and Benefits to The Executive.  Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims as des cribed in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.3.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in

5

accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v)  payment of outplacement services for the Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in thi s Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.3.2           Payment of Monies and Benefits.  The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.3.1(ii) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.3.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations.  The payment described in Section 4.3.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4           By The Executive for Good Reason.   Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

4.4.1           Monies and Benefits to The Executive.  Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreemen t during such thirty

6

(30) day period; and, subject to his execution of a release of claims as described in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the med ical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.4.2           Payment of Monies and Benefits.  The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.4.1(ii ) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payment described in Section 4.4.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

7

4.4.3           Good Reason Defined.  For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) materially reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity level from the level in effect on the Effective Date (or some subsequent higher) level put into effect by the Board subsequent to the Effective Date, unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives, (ii) willfully fails to include the Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Company to other executive level executives, (iii) materially reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities, (iv) hires an executive senior to the Executive, or (v) requires the Executive to (A) regularly perform the duties and responsibilities of the Position at, or (B) relocate the Executive’ ;s principal place of employment to, a location which is more than fifty (50) miles from the location of the Executive’s principal place of employment as of the Effective Date.  Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries.  Further, Good Reason shall not include any of the events or conditions described in items (i), (ii), (iii) or (iv) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executive shall continue to work exclusively for the Company during such thirty (30) day cur e period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

4.5           By The Executive Without Good Reason.  Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason.  If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

4.5.1           Monies and Benefits to The Executive.  The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no oth er monies or benefits shall be payable or owed to the Executive under this

8

Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.6           By Company Due to Change in Control.  In the event a Change in Control (as hereafter defined) occurs and during the period beginning six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control: (i) this Agreement is terminated by the Company or its successor without Good Cause, or (ii) this Agreement is termina ted by the Executive with Good Reason, the Executive shall be entitled to receive, and the Company or its successor shall be obligated to pay, the monies and benefits described in this Section 4.6, and Sections 4.3 or 4.4 shall not be applicable to such Change in Control or termination.

4.6.1           Monies and Benefits to the Executive.  Upon termination of the Executive’s employment in connection with a Change in Control, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise accrued and unpaid, through the date of such termination of employment, and subject to his execution of a release of claims as described in Section 4.7, (ii) two (2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of termination at the Target Rate; (iv) continuation of the medical, dental and other benefits described in Section 3.3 under which the Executive is participating as of the date of such Change in Control for a period of twenty-four (24) months from the date of termination provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of the Company for such period with n o changes to such benefits or plans, (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such Change in Control or termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00, and (vi) continuation of the financial planning allowance described in Section 3.5 for a period of twenty-four (24) months from termination. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than as described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.6.2           Payment of Monies and Benefits.  The payments described in Section 4.6.1(i) shall be paid to the Executive in a lump sum on the Company’s or its successor’ next regular payday, if applicable, or within thirty (30) days of the date of termination, whichever is earlier, and shall be subject to withholding for applicable taxes and any other legally require d or previously agreed payroll deductions.  Any payment described in Sections 4.6.1(ii) and (iii) shall be paid to

9

the Executive in a lump sum within thirty (30) days, but no sooner than eight (8) days after the Executive returns an executed copy of any release of claims provided by the Company (provided that such release be delivered to the Executive within seven (7) days or less following termination) and shall be subject to withholdings of applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.6.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payments described in Section 4.6.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from such entity.  The reimbursement of the expenses related to Section 4.6.1(vi) shall be made to the Executive in accordance with the Company’s or its successor’s policies and procedures.

4.6.3           Change in Control Defined.   For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred:

(a)  on such date within the 12-month period following the date that any one person, or more than one person acting as a group (as defined in §1.409A 3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities (the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;

EX-10

EXHIBIT 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into and effective as of this 6th day of August, 2010 by and between STAGE STORES, INC., a Nevada corporation (the “Company”), and STEVEN HUNTER, an individual (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide for the continued employment of the executive from and after the effective date, and has determined that it is in the best interests of the Company to appoint the Executive to the position of Executive Vice President, Chief Information Officer (the “Position”), subject to the terms and conditions of this Agreement; and

WHEREAS, the Executive desires to be appointed to the Position, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.        EMPLOYMENT.  Company hereby appoints Executive to the Position, and Executive hereby accepts such appointment to the Position, subject to the terms and conditions set forth in this Agreement.  Subject to earlier termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of thirty-six (36) months commencing from the effective date hereof (the “Initial Term”).  Upon the expiration of the Initial Term or any Renewal Period (as hereafter described), the term of Executive’s employment under this Agreement shall automatically be extended for an additional thirty-six (36) month period (a “Renewal Period”), subject to earlier termination in accordance with Section 4 below, unless either the Company or Executive notifies the other party in writing at least thirty (30) days prior to the expiration of the Initial Term or the then current Renewal Period that the Employment Period shall not be extended upon such expiration.

1.1           Failure to Extend by Company.  In the event the Company notifies Executive that the Employment Period shall not be extended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Company without Good Cause (as defined in Section 4.2.2), and the Company and Executive agree that the  Executive shall be entitled to receive the payments described in Section 4.3.

1.2           Failure to Extend by Executive.  In the event Executive notifies the Company that the Employment Period shall not be extended at the expiration of the Initial term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by Executive without Good Reason (as defined in section 4.4.3), a nd the Company and Executive agree that Executive shall be entitled to receive the payments described in Section 4.5.

2.        POSITION AND DUTIES.  During such time as Executive is employed with the Company (the “Employment Period”), Executive shall serve in the Position and shall have the normal duties, responsibilities and authority associated with or related to such Position, subject to the power and authority of the Board and executive officers of the company to expand or limit such duties, res ponsibilities and authority and to override actions of the Executive.  The Executive shall report to the Board and Executive Management of the Company.  Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and its “Subsidiaries” (as hereafter defined) and any duty, task or responsibility assigned or given to Executive by the Board, and Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. As used in this Agreement, “Subsidiaries” shall mean any entity of which the securities having a majority of the voting power in electing directors or managers are, at the time of determination, owned by the Company either directly or through one or more Subsidiaries.

2.1           Outside Directorships.  In the event Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than the Company or its Subsidiaries, or any religious, charitable, civic or governmental entity organization), the Executive shall notify the Board in writing of s uch invitation, the entity or organization extending the invitation and the capacity to be served by Executive for such entity or organization.  The Board shall have the sole power and authority to authorize Executive to accept such invitation based on such criteria and standards as the Board may determine, and Executive shall not accept such invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

2.2           Delegation by Board.  Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for such action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board ha d taken such action directly.

3.        COMPENSATION AND BENEFITS.  During the Employment Period, Executive shall be paid or receive compensation and benefits as follows:

3.1           Base Salary.  The base salary for Executive shall be $375,000 per year, or such other rate as the Board may designate from time to time (the “Base Salary”).  The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.  The Executive’s performance shall be evaluated annually in March of each year.  Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

2

3.2           Incentive Compensation.  For any fiscal year ending during the Employment Period, the Board may, but is not obligated to, award incentive compensation to the Executive based upon the Company’s operating results for and the Executive’s performance during such fiscal year and such other performance objectives, targets and criteria for the Executive that the Board may establish and adjust for that fiscal year (the “Incentive Compensation”).  The amount of any Incentive Compensation shall be calculated as a percentage of the Base Salary (current Target Rate is 50% of Base Salary) in effect during that fiscal year, which percentage shall be determined and may be adjusted by the Board (the “Target Rate”) based on such results, performance and objectives.  In addition to such results, performance and objectives, the Board may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during that fiscal year deemed appropriate by the Board in determining any Incentive Compensation.  The Company shall pay to the Executive any approved Incentive Compensation on or around April 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executi ve was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.

3.3           Medical, Dental and Other Benefits.   The Executive shall be eligible to enroll and participate in any and all benefit plans the Company provides to its senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, li fe and disability insurance, retirement plans and deferred compensation plans.  The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans.  The Executive shall receive four (4) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited.  Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement.  All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan d ocument, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

3.4           Automobile Allowance.  Company shall provide the Executive with an automobile allowance in the amount of $1,000.00 per month to be allocated at the Executive’s discretion, or such other monthly amount designated by the Board, and that allowance shall be payable in regular installments in accordance with the Company’s general payroll practices.

3

3.5.           Financial Planning Allowance.  The Company shall reimburse the Executive for any expense incurred by the Executive in connection with the preparation of taxes, estate planning or financial counseling (not to include investment fees or related expenses) up to a maximum of $5,000.00 per calendar year, or such other annual amount designated by the Board, which amount m ay not be carried forward to any subsequent calendar year.  Such expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

3.6           Business Expense.  The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position.  Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to s uch reimbursable expenses.

4.           TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party's ongoing obligations under this Agreement.  Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determi ned in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him [her] under this Agreement from the Company in the event of termination.

4.1           Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

4.1.1           Monies and Payments to the Executive. Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans.  No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement.  The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans.

4.1.2           Disability Defined. For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of

4

the Executive prevents him from the normal performance of his duties as determined by the Board.

4.2           By Company For Good Cause.  Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

4.2.1           Monies and Payments to The Executive.  Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executiv e under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.2.2           Good Cause Defined.  “If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”: (i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction; (ii) a material and significant act of dishonesty by the Executive relating to the Company; (iii) a willful act or failure to act by the Executive that substantially impairs his ability to function as an employee of the Company and/or which substantially and negatively impacts the Board’s confidence and trust in the Executive (in the Board’s reasonable discretion); or (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board  within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive.”

4.3           By Company Without Good Cause.  Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

4.3.1           Monies and Benefits to The Executive.  Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims a s described in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.3.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in

5

accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v)  payment of outplacement services for the Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $10,000.00.  Notwithstanding anything in thi s Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.3.2           Payment of Monies and Benefits.  The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Se ction 4.3.1(ii) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.3.1(iv) shall be provided in a ccordance with the terms of the applicable plans and in compliance with COBRA regulations.  The payment described in Section 4.3.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4           By The Executive for Good Reason.   Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

4.4.1           Monies and Benefits to The Executive.  Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement dur ing such thirty

6

(30) day period; and, subject to his execution of a release of claims as described in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentiv e Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3(i) above if the Executive a ttempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.4.2           Payment of Monies and Benefits.  The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.4.1(ii ) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payment described in Section 4.4.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

7

4.4.3           Good Reason Defined.  For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) materially reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity level from the level in effect on the Effective Date (or some subsequent higher) level put into effect by the Board subsequent to the Effective Date, unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives, (ii) willfully fails to include Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Company to other executive level executives, (iii) materially reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities, (iv) hires an executive senior to the Executive; or (v) requires the Executive to (A) regularly perform the duties and responsibilities of the Position at, or (B) relocate the Executive’s p rincipal place of employment to, a location which is more than fifty (50) miles from the location of the Executive’s principal place of employment as of the Effective Date.  Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries.  Further, Good Reason shall not include any of the events or conditions described in items (i), (ii), (iii) or (iv) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executive shall continue to work exclusively for the Company during such thirty (30) day cure pe riod; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

4.5           By The Executive Without Good Reason.  Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason.  If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

4.5.1           Monies and Benefits to The Executive.  The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no oth er monies or benefits shall be payable or owed to the Executive under this

8

Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.6           By Company Due to Change in Control.  In the event a Change in Control (as hereafter defined) occurs and during the period beginning six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control: (i) this Agreement is terminated by the Company or its successor without Good Cause, or (ii) this Agreement is termina ted by the Executive with Good Reason, the Executive shall be entitled to receive, and the Company or its successor shall be obligated to pay, the monies and benefits described in this Section 4.6, and Sections 4.3 or 4.4 shall not be applicable to such Change in Control or termination.

4.6.1           Monies and Benefits to the Executive.  Upon termination of the Executive’s employment in connection with a Change in Control, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise accrued and unpaid, through the date of such termination of employment, and subject to his execution of a release of claims as described in Section 4.7, (ii) two (2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of termination at the target rate; (iv) continuation of the medical, dental and other benefits described in Section 3.3 under which the Executive is participating as of the date of such Change in Control for a period of twenty-four (24) months from the date of termination provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period with no ch anges to such benefits or plans. (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such Change in Control or termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00, and (vi) continuation of the financial planning allowance described in Section 3.5 for a period of twenty-four (24) months from termination. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than as described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his [ongoing obligations under this Agreement.

4.6.2           Payment of Monies and Benefits.  The payments described in Section 4.6.1(i) shall be paid to the Executive in a lump sum on the Company’s or its successor’ next regular payday, if applicable, or within thirty (30) days of the date of termination, whichever is earlier, and shall be subject to withholding for applicable taxes and any other legally require d or previously agreed payroll deductions.  Any payment described in Sections 4.6.1(ii) and (iii) shall be paid to

9

the Executive in a lump sum within thirty (30) days, but no sooner than eight (8) days after the Executive returns an executed copy of any release of claims provided by the Company (provided that such release be delivered to Executive within seven (7) days or less following termination) and shall be subject to withholdings of applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.6.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payments described in Section 4.6.1(v) shall be paid directly to the entity providing outplacement services to Executive within ten (10) days of receipt of an invoice or statement from such entity.  The reimbursement of the expenses related to Section 0;4.6.1(vi) shall be made to Executive in accordance with the Company’s or its successor’s policies and procedures.

4.6.3           Change in Control Defined.   For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred:

(a)  on such date within the 12-month period following the date that any one person, or more than one person acting as a group (as defined in §1.409A 3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities (the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;

EX-10

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into and effective as of this 30th day of August, 2010 (the “Effective Date”) by and between STAGE STORES, INC., a Nevada corporation (the “Company”), and ROBERT BERNARD, an individual (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide for the continued employment of the executive from and after the effective date, and has determined that it is in the best interests of the Company to appoint the Executive to the position of President, Chief Operating Officer of the Company’s South Hill Division (the “Position”), subject to the terms and conditions of this Agreement; and

WHEREAS, the Executive desires to be appointed to the Position, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.           EMPLOYMENT.  The Company hereby appoints the Executive to the Position, and the Executive hereby accepts such employment with the Company and appointment to the Position, subject to the terms and conditions set forth in this Agreement.  Subject to earlier termination in accordance with Section 4 below, this Agreement shall continue in effect for a period of thirty-six (36) months commencing from the Effective Date (the “Initial Term”).  Upon the expiration of the Initial Term or any Renewal Period (as hereafter described), the term of Executive’s employment under this Agreement shall automatically be extended for an additional thirty-six (36) month period (a “Renewal Period”), subject to earlier termination in accordance with Section 4 below, unless either the Company or the Executive notifies the other party in writing at least thirty (30) days prior to the expiration of the Initial Term or the then current Renewal Period that the Employment Period (as defined in Section 2) shall not be extended upon such expiration.

1.1           Failure to Extend by Company.  In the event the Company notifies the Executive that the Employment Period shall not be e xtended at the expiration of the Initial Term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termination of this Agreement by the Company without Good Cause (as defined in Section 4.2.2), and the Company and the Executive agree that the  Executive shall be entitled to receive the payments described in Section 4.3.

1.2           Failure to Extend by Executive.  In the event the Executive notifies the Company that the Employment Period shall not be extended at the expiration of the Initial term or the then current Renewal Period in accordance with Section 1, such failure to extend shall constitute termi nation of this Agreement by the Executive without Good

Reason (as defined in section 4.4.3), and the Company and the Executive agree that the Executive shall be entitled to receive the payments described in Section 4.5.

2.           POSITION AND DUTIES.  During such time as the Executive is employed with the Company (the “Employment Period”), the Executive shall serve in the Position and shall have the normal duties, responsibilities and authority associated with or related to such Position, subject to the power and authority of the Board and executive officers of the Company to expand or limit such duties, responsibilities and authority and to override actions of the Executive.  The Executive shall report to the Board and Executive Management of the Company.  The Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) exclusively to the business and affairs of the Company and its Subsidiaries (as hereafter defined) and any duty, task or responsibility assigned or given to the Executive by the Board, and the Executive shall perform these duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. As used in this Agreement, “Subsidiaries” shall mean any entity of which the securities having a majority of the voting power in electing directors or managers are, at the time of determination, owned by the Company either directly or through one or more Subsidiaries.

2.1           Outside Directorships.  In the event the Executive is invited, solicited or otherwise asked to become a director, advisor or consultant for any entity or organization of any type or function whatsoever (other than the Company or its Subsidiaries, or any religious, charitable, civic or governmental entity organization), the Executive shall notify the Board in writing of such invitation, the entity or organization extending the invitation and the capacity to be served by the Executive for such entity or organization.  The Board shall have the sole power and authority to authorize the Executive to accept such invitation based on such criteria and standards as the Board may determine, and the Executive shall not accept such invitation without the Board’s prior written consent, which consent shall not be unreasonably withheld.

2.2           Delegation by Board.  Whenever this Agreement calls for action on the part of the Board, the Board may delegate responsibility for the action to a duly appointed committee of the Board including, but not limited to the Compensation Committee of the Board, and the Executive agrees to treat, comply with and be bound by any action taken by such committee as if the Board had taken such action directly.

3.           COMPENSATION AND BENEFITS.  During the Employment Period, the Executive shall be paid or receive compensation and benefits as follows:

3.1           Base Salary.  The base salary for the Executive shall be $450,000 per year, or such other rate as the Board may designate from time to time (the “Base Salary”).  The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to withholdings for applicable taxes and o ther legally-required or previously-agreed payroll deductions. The Executive’s performance shall be evaluated annually in March of each year. Any future salary increases will be based on the Executive’s individual performance and will be approved by the Board in its sole discretion.

2

3.2           Incentive Compensation.  For any fiscal year ending during the Employment Period, the Board may, but is not obligated to, award incentive compensation to the Executive based upon the Company’s operating results for and the Executive’s performance during such fiscal year and such other performance objectives, targets and criteria for the Executive that the Board may establish and adjust for that fiscal year (the “Incentive Compensation”).  The amount of any Incentive Compensation shall be calculated as a percentage of the Base Salary (current Target Rate is 60% of Base Salary) in effect during that fiscal year, which percentage shall be determined and may be adjusted by the Board (the “Target Rate”) based on such results, performance and objectives.  In addition to such results, performance and objectives, the Board may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during that fiscal year deemed appropriate by the Board in determining any Incentive Compensation.  The Company shall pay to the Executive any approved Incentive Compensation on or around April 1 following the end of the fiscal year for which the Incentive Compensation was based; provided, that the Executi ve was employed in the Position as of that fiscal year end, and any such Incentive Compensation shall be subject to withholdings for applicable taxes and other legally-required or previously-agreed payroll deductions.

3.3           Medical, Dental and Other Benefits.   The Executive shall be eligible to enroll and participate in any and all benefit plans the Company provides to its senior level executives, as modified, amended or terminated from time to time in accordance with the applicable policies or plan documents and which may include, but not be limited to, medical and dental coverage, li fe and disability insurance, retirement plans and deferred compensation plans.  The premiums, costs and expenses for any benefit plans under which the Executive is participating shall be borne by the Executive and the Company in accordance with the Company’s policies related to such plans.  The Executive shall receive four (4) weeks of paid vacation each year, which if not taken may not be carried forward to any subsequent year. The Executive shall not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days shall be forfeited.  Any and all benefits provided for hereunder shall not be included in the definition of the term “Base Salary” as that term is used in this Agreement.  All such benefits shall immediately cease and terminate upon the later of (1) the termination date of the Employment Period, (2) the expiration date of coverage under the terms of the applicable plan d ocument, or (3) the expiration date of coverage for such benefits by the Company as described in Section 4; provided, that upon such termination, the Executive shall have the right to elect to continue any or all of such health benefits, programs or coverage, at his sole cost and expense, in accordance with and subject to the terms and limitations set forth in the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.

3.4           Automobile Allowance.  The Company shall provide the Executive with an automobile allowance in the amount of $1,000.00 per month to be allocated at the Executive’s discretion, or such other monthly amount designated by the Board, and that

3

allowance shall be payable in regular installments in accordance with the Company’s general payroll practices.

3.5.           Financial Planning Allowance.  The Company shall reimburse the Executive for any expense incurred by the Executive in connection with the preparation of taxes, estate planning or financial counseling (not to include investment fees or related expenses) up to a maximum of $5,000.00 per calendar year, or such other annual amount designated by the Board, which amount m ay not be carried forward to any subsequent calendar year.  Such expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to such reimbursable expenses.

3.6           Business Expense.  The Company shall reimburse the Executive for all reasonable travel, entertainment and other business expenses incurred by the Executive in the course of performing the duties of the Position.  Those expenses shall be reimbursed in accordance with the standard policies and procedures of the Company in effect from time to time related to s uch reimbursable expenses.

4.           TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be terminated upon the occurrence of any of the following events; provided that the termination of this Agreement shall not affect either party's ongoing obligations under this Agreement.  Upon such termination, the rights of the Executive to receive monies and benefits from the Company shall be determi ned in accordance with this Section 4, and the Executive agrees that such monies and benefits are fair and reasonable and are the sole monies and benefits which shall be due to him under this Agreement from the Company in the event of termination.

4.1           Termination Due to Death or Disability. This Agreement will automatically terminate in the event of the Executive’s death or Disability (as hereafter defined).

4.1.1           Monies and Payments to the Executive. Upon termination in the event of the Executive’s death or Disability, the Executive (or as applicable, his designated beneficiary or personal representative or estate) shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination and (ii) any life insurance, disability insurance or retirement plan benefits due under the terms of the applicable policies or plans.  No other monies or benefits shall be payable or owed to the Executive (or as applicable, his designated beneficiary or personal representative or estate) under this Agreement.  The monies described in (i) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  The monies described in (ii) above shall be paid to the Executive (or as applicable, his designated beneficiary or personal representative or estate) in accordance with the terms of the applicable plans.

4

4.1.2           Disability Defined. For the purposes of this Agreement, the Executive shall be deemed to have terminated his employment by reason of “Disability”, if the Board shall determine that the physical or mental condition of the Executive prevents him from the normal performance of his duties as determined by the Board.

4.2           By Company For Good Cause.  Upon written notice to the Executive, the Company may immediately terminate this Agreement at any time during the Employment Period for “Good Cause” (as hereafter defined).

4.2.1           Monies and Payments to The Executive.  Upon termination for Good Cause, the Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and no other monies or benefits shall be payable or owed to the Executiv e under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.2.2           Good Cause Defined.  If the Company terminates the Executive’s employment for any of the following reasons, the termination shall be for “Good Cause”: (i) the Executive’s criminal conviction of a felony by a federal or state court of competent jurisdiction; (ii) a material and significant act of dishonesty by the Executive relating to the Company; (iii) a willful act or failure to act by the Executive that substantially impairs his ability to function as an employee of the Company and/or which substantially and negatively impacts the Board’s confidence and trust in the Executive (in the Board’s reasonable discretion); or (iv) the Executive’s failure to follow a direct, reasonable and lawful order from the Company’s Board within the reasonable scope of the Position, which failure, if remediable, is not remedied within thirty (30) days after written notice to the Executive.

4.3           By Company Without Good Cause.  Upon fifteen (15) days prior written notice to the Executive, the Company may terminate this Agreement at any time during the Employment Period without Good Cause.

4.3.1           Monies and Benefits to The Executive.  Upon termination without Good Cause, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination, and subject to his execution of a release of claims as des cribed in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive

5

Compensation under this Section 4.3.1(iii) unless the Board determines in good faith that the Executive would have been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v)  payment of outplacement services for the Executive for a period of tw elve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $10,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3.1(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.3.2           Payment of Monies and Benefits.  The payments described in Section 4.3.1(i) shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Se ction 4.3.1(ii) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular bi-weekly paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.3.1(iv) shall be provided in a ccordance with the terms of the applicable plans and in compliance with COBRA regulations.  The payment described in Section 4.3.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4           By The Executive for Good Reason.   Upon thirty (30) days prior written notice, the Executive may terminate this Agreement at any time during the Employment Period for “Good Reason” (as hereafter defined and subject to the notice and cure periods hereafter described).

4.4.1           Monies and Benefits to The Executive.  Upon termination for Good Reason, the Executive shall be entitled to receive: (i) earned and unpaid

6

Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise through the date of such termination or the date on which the Company terminates this Agreement during such thirty (30) day period; and, subject to his execution of a release of claims as described in Section 4.7, (ii) one (1) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of such termination; provided, however, the Executive shall not receive any portion of the Incentive Compensation under this Section 4.4.1(iii) unless the Board determines in good faith that the Executive would hav e been entitled to receive any Incentive Compensation for the fiscal year in which such termination occurred in accordance with Section 3.2, (iv) continuation of the medical and dental benefits described in Section 3.3 under which the Executive is participating as of the date of such termination for a period of twelve (12) months from the date of such termination; provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of Company for such period, and (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such termination; provided, however, the aggregate amount of such payments shall not exceed $10,000.00.  Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than those described in Section 4.3.1(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.4.2           Payment of Monies and Benefits.  The payments described in Section 4.4.1(i) shall be paid to the Executive on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Section 4.4 .1(ii) shall be paid to the Executive in twenty-six (26) equal installments on the Company’s regular paydays, commencing on the first regular payday that occurs eight (8) or more days after the Executive returns an executed copy of any release of claims provided by the Company, and continuing until fully paid, and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  Any payment described in Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following the end of the fiscal year in which such termination occurred and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.4.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payment described in Section 4.4.1(v) shall be paid directly to the entity providing

7

outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from that entity.

4.4.3           Good Reason Defined.  For purposes of this Agreement, “Good Reason” shall exist if, without the Executive’s express written consent, the Company: (i) materially reduces or decreases the Executive’s Base Salary or Incentive Compensation opportunity level from the level in effect on the Effective Date (or some subsequent higher) level put into effect by the Board subsequent to the Effective Date, unless such reduction or decrease is in connection with an across-the-board reduction or decrease in the Base Salaries or Incentive Compensation opportunity levels of all the Company’s other senior level executives, (ii) willfully fails to include the Executive in any incentive compensation plans, bonus plans, or other plans and benefits provided by the Company to other executive level executives, (iii) materially reduces, decreases or diminishes the nature, status or duties and responsibilities of the Position from those in effect on the Effective Date, and such reduction, decrease or diminution is not reasonably related to or the result of an adverse change in the Executive’s performance of assigned duties and responsibilities, (iv) hires an executive senior to the Executive, or (v) requires the Executive to (A) regularly perform the duties and responsibilities of the Position at, or (B) relocate the Executive’ ;s principal place of employment to, a location which is more than fifty (50) miles from the location of the Executive’s principal place of employment as of the Effective Date.  Notwithstanding the above, Good Reason shall not include the death, Disability or voluntary retirement of the Executive or any other voluntary action taken by or agreed to by the Executive related to the Position or his employment with the Company or its Subsidiaries.  Further, Good Reason shall not include any of the events or conditions described in items (i), (ii), (iii) or (iv) above unless the Executive provides notice to the Company of the existence of the event or condition within ninety (90) days of the initial existence of the event or condition and, upon receipt of such notice, the Company has a period of at least thirty (30) days during which to cure the event or condition. If requested by the Company, the Executive shall continue to work exclusively for the Company during such thirty (30) day cur e period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such thirty (30) day cure period upon written notice to the Executive.

4.5           By The Executive Without Good Reason.  Upon fifteen (15) days prior written notice to the Company, the Executive may terminate this Agreement at any time during the Employment Period without Good Reason.  If requested by the Company, the Executive shall continue to work exclusively for the Company during such fifteen (15) day period; provided, however, the Company shall have the right, in its sole discretion, to terminate this Agreement at any time during such fifteen (15) day period upon written notice to the Executive.

4.5.1           Monies and Benefits to The Executive.  The Executive shall be entitled to receive earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or

8

otherwise through the date of such termination or the date on which the Company terminates this Agreement during such fifteen (15) day period, and no other monies or benefits shall be payable or owed to the Executive under this Agreement. The monies described above shall be paid to the Executive in a lump sum on the Company’s next regular payday after the date of such termination and shall be subject to withholdings for applicable taxes and any other legally required or previously agreed payroll deductions.

4.6           By Company Due to Change in Control.  In the event a Change in Control (as hereafter defined) occurs and during the period beginning six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control: (i) this Agreement is terminated by the Company or its successor without Good Cause, or (ii) this Agreement is termina ted by the Executive with Good Reason, the Executive shall be entitled to receive, and the Company or its successor shall be obligated to pay, the monies and benefits described in this Section 4.6, and Sections 4.3 or 4.4 shall not be applicable to such Change in Control or termination.

4.6.1           Monies and Benefits to the Executive.  Upon termination of the Executive’s employment in connection with a Change in Control, the Executive shall be entitled to receive: (i) earned and unpaid Base Salary, unreimbursed business expenses due under Section 3.6 and any other benefits due under Section 3.3 or otherwise accrued and unpaid, through the date of such termination of employment, and subject to his execution of a release of claims as described in Section 4.7, (ii) two (2) times the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in effect as of the date of such termination, (iii) any Incentive Compensation for the fiscal year in which such termination occurs pro-rated through the date of termination at the Target Rate, (iv) continuation of the medical, dental and other benefits described in Section 3.3 under which the Executive is participating as of the date of such Change in Control for a period of twenty-four (24) months from the date of termination provided that such continuation of benefits shall be pursuant to COBRA, with the Company paying such portions of the applicable premiums as it would have paid had the Executive continued to be a full-time active employee of the Company for such period with n o changes to such benefits or plans, (v) payment of outplacement services for Executive for a period of twelve (12) months from the date of such Change in Control or termination; provided, however, the aggregate amount of such payments shall not exceed $15,000.00, and (vi) continuation of the financial planning allowance described in Section 3.5 for a period of twenty-four (24) months from termination. Notwithstanding anything in this Section 4, however, the Company shall not be required to commence or continue any payment of monies or benefits other than as described in Section 4.3(i) above if the Executive attempts to rescind the release of claims he has executed or fails to comply with his ongoing obligations under this Agreement.

4.6.2           Payment of Monies and Benefits.  The payments described in Section 4.6.1(i) shall be paid to the Executive in a lump sum on the Company’s or its successor’ next regular payday, if applicable, or within thirty (30) days of the

9

date of termination, whichever is earlier, and shall be subject to withholding for applicable taxes and any other legally required or previously agreed payroll deductions.  Any payment described in Sections 4.6.1(ii) and (iii) shall be paid to the Executive in a lump sum within thirty (30) days, but no sooner than eight (8) days after the Executive returns an executed copy of any release of claims provided by the Company (provided that such release be delivered to the Executive within seven (7) days or less following termination) and shall be subject to withholdings of applicable taxes and any other legally required or previously agreed payroll deductions.  Any benefits described in Section 4.6.1(iv) shall be provided in accordance with the terms of the applicable plans and in compliance with COBRA regulations. The payments described in Section 4.6.1(v) shall be paid directly to the entity providing outplacement services to the Executive within ten (10) days of receipt of an invoice or statement from such entity.  The reimbursement of the expenses related to Section 4.6.1(vi) shall be made to the Executive in accordance with the Company’s or its successor’s policies and procedures.

4.6.3           Change in Control Defined.   For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred:

(a)  on such date within the 12-month period following the date that any one person, or more than one person acting as a group (as defined in §1.409A 3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that represents twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities (the “Trigger Date”), that a majority of the individuals who, as of the Trigger Date, constitute the Board (the “Incumbent Board”) are replaced by new members whose appointment or election is not endorsed by a majority of the members of the Incumbent Board before the date of such appointment or election;

EX-24

EXHIBIT 24.2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Stage Stores, Inc., a Nevada corporation (the “Company”), in connection with the preparation and filing of reports on Form 3, 4 and 5 (as well as applications for EDGAR filer identification numbers and any other reports required under Section 16(a) of the Securities Exchange Act of 1934) and Form 144, if required under the Securities Act of 1933, on my behalf including, but not limited to, those cases where time is short or I am unavailable to review the form, hereby constitutes and appoints Andrew T. Hall, Edward J. Record and Richard E. Stasyszen, and each of them (with full power to each of them to act alone), the undersigned’s true and lawful attorneys-in-fact and agents, for the undersigned and on the undersigned’s behalf and in the undersigned’s name, place and stead, in any and all capacities, to prepare, sign, and file with the Securities and Exchange Commission reports on Form 3, 4 and 5 (as well as applications for EDGAR filer identification numbers and any other reports required under Section 16(a) of the Securities Exchange Act of 1934) and Form 144, if required under the Securities Act of 1933, together with all amendments thereto, with all exhibits and any and all documents required to be filed with respect thereto with the Securities and Exchange Commission and any other regulatory authority granting unto such attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in order to effectuate the same as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, might lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney as of the 21st day of September, 2010.

/s/ Gabrielle E. Greene                                                                                 
60;                                                        

    Gabrielle E. Greene, Director

EX-31

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Andrew T. Hall, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Stage Stores, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant, and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

December 9, 2010	/s/ Andrew T. Hall
	Andrew T. Hall
	Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Edward J. Record, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Stage Stores, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant, and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

December 9, 2010	/s/ Edward J. Record
	Edward J. Record
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Stage Stores, Inc. (the "Company") on Form 10-Q for the quarter ended October 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Andrew T. Hall and Edward J. Record, Chief Executive Officer and Chief Financial Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 9, 2010	/s/ Andrew T. Hall
	Andrew T. Hall
	Chief Executive Officer

/s/ Edward J. Record

Edward J. Record

Chief Financial Officer