In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and is effective for the Company beginning February 2, 2003. The adoption is not expected to have a material effect on the Company's financial position or results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company adopted SFAS No. 144 effective February 3, 2002. The adoption did not have a material effect on the Company's financial position or results of operations.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 clarifies guidance related to the reporting of gains and losses from extinguishment of debt and resolves inconsistencies related to the required accounting treatment of certain lease modifications. SFAS No. 145 also amends other existing pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The provisions relating to the reporting of gains and losses from extinguishment of debt become effective for the Company beginning February 2, 2003 with earlier adoption encouraged. All other provisions of this standard are currently effective for the Company and did not have a significant impact on the Company's financial condition or results of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires costs associated with exit or disposal activities to be recognized when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is effective for the Company beginning February 2, 2003. The Company is currently evaluating the impact that this provision will have on its future results of operations and financial condition.

     Certain statements in this Form 10-Q contain or may 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. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other 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 to maintain normal trade terms with vendors, the ability of the Company and its subsidiaries to comply with the various covenant requirements contained in the Company's Financing Agreements, the ability of the Company to maintain its private label credit card program, including the quality of its accounts receiv able portfolio, the demand for apparel and other factors. The demand for apparel can be affected by an economic downturn, a decline in consumer confidence, unusual weather patterns, an increase in the level of competition in the Company's market areas, competitors' marketing strategies, changes in fashion trends, 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 and closing plans. In addition, the Company cannot predict, with any degree of certainty, what effect, if any, events of terrorism, if any, will have on the Company and its operations. The occurrence of any of the above could have a material and adverse impact on the Company's operating results. Most of these factors are difficult to predict accurately and are generally beyond our control. Readers should consider the areas of risk described under the caption "Risk Factors" in Item 7 of the Company's Form 10-K for the year ended February 2, 2002 (the "Form 10-K") and Item 2 of the Company's Form 10-Q for the quarter ended May 4, 2002 (the "First Quarter Form 10-Q"). 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 described under "Risk Factors" in the Form 10-K and First Quarter Form 10-Q. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

     Overview. Stage Stores is a Houston, Texas-based regional family apparel store retailer offering moderately priced, nationally recognized brand name and private label apparel, accessories, cosmetics and footwear for the entire family. The Company has recognized the high level of brand awareness and demand for fashionable, quality apparel by consumers in small and mid-size markets and has identified these markets as a profitable and under-served niche. The Company believes that it has developed a unique retailing concept in these markets by offering a broad range of brand name merchandise with a high level of customer service in convenient locations.

     As of August 3, 2002, the Company, through its wholly owned subsidiaries Specialty Retailers (TX) LP and SRI Limited Partner LLC, operated 347 stores located in 13 states throughout the south central United States. Although the Company's stores may be operated under its "Stage", "Bealls" and "Palais Royal" trade names depending on the geographical market, the Company operates the vast majority of its stores under one concept and one strategy.

     On June 1, 2000, the Company's predecessors, Stage Stores, Inc., a Delaware corporation,, Specialty Retailers, Inc. (NV) and Specialty Retailers, Inc. (collectively, the "Debtors") filed voluntarily petitions for reorganization under Chapter 11 of the Federal Bankruptcy Code (the "Chapter 11 Proceedings"). The Company's Plan of Reorganization (the "Plan") was confirmed on August 8, 2001 and became effective on August 24, 2001 (the "Effective Date"). For financial reporting purposes, the Effective Date of the Plan was assumed to be September 1, 2001, the last day of the Company's seventh fiscal period. With the change in ownership resulting from the Plan, the Company adopted fresh-start reporting in accordance with the recommended accounting principles for entities emerging from Chapter 11 set forth in the American Institute of Certified Public Accountants Statement of Position 90-7 Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. The adjustments to reflect the consummation of the Plan, including the gain on discharge of pre-petition liabilities and the adjustment to record assets and liabilities at their fair value, were reflected in the thirty week period ended September 1, 2001 and are not included herein. Accordingly, the financial position and operations for the Reorganized Company are not prepared on a basis comparable to those of the Predecessor Company.

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

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

     See "Proforma Operating Results" discussion below for proforma operating results for the thirteen and twenty-six weeks ended August 4, 2001 as if the Plan had been effective and all store closures related to the Company's reorganization had been completed as of the beginning of fiscal 2001.

     Sales for the thirteen weeks ended August 3, 2002 (the "current year second quarter") increased 6.1% to $207.5 million from $195.5 million for the thirteen weeks ended August 4, 2001 (the "prior year second quarter"). Comparable store sales, for stores opened fourteen months, increased 6.5%. The increase in comparable store sales in the current year second quarter was driven by positive comparable store sales performances in the Company's children's, misses sportswear, dresses, shoes, accessories, juniors, swimwear and home/gifts departments. The lower rate of increase in total sales as compared to the rate of increase in comparable store sales reflects the impact of a fewer number of stores in operation in the current year second quarter as compared to the prior year second quarter. During the prior year second quarter, the Company operated 347 stores throughout most of the period while it operated 342 stores during most of the current year second quarter. St ores which have been closed accounted for approximately $3.0 million of the prior year second quarter sales.

     Gross profit increased 9.2% to $61.1 million for the current year second quarter from $55.9 million for the prior year second quarter. Gross profit, as a percent of sales, increased to 29.4% for the current year second quarter from 28.6% for the prior year second quarter. The gross profit percentage for the current year second quarter as compared to the prior year second quarter benefited from (i) a reduction in the shrink accrual rate from 1.8% of sales in the prior year second quarter to 1.6% in current year second quarter as a result of favorable results of recent store physical inventories taken and ongoing loss prevention enhancements and (ii) lower depreciation expense of approximately $1.0 million due to the basis reduction to recorded property, equipment and leasehold improvements which occurred in the third quarter of the prior year as part of the fresh-start adjustments.

     Selling, general and administrative ("SG&A") expenses for the current year second quarter decreased 1.3% to $43.7 million from $44.3 million in the prior year second quarter and, as a percent of sales, decreased to 21.1% from 22.7% in the comparable period last year. SG&A expenses for the current year second quarter as compared to the prior year second quarter benefited from approximately $0.3 million of lower depreciation expense as discussed in the preceding paragraph and an increase in net credit income, which is recorded in SG&A expenses. Net credit income was a reduction to SG&A expenses of $2.7 million in the current year second quarter compared to $2.2 million in the prior year second quarter. For a detailed analysis of the components of net credit income, see "Components of Net Credit Income". The remaining improvement as a rate of sales is primarily due to lower utility and advertising expenditures and improved leverage of SG&A e xpenses.

     Store opening costs in the current year second quarter of $0.4 million relate to the five new stores opened in July 2002. The Company had no store openings in the prior year second quarter.

     The Company incurred $5.1 million of reorganization items and store closure costs in the prior year second quarter primarily related to professional fees paid in connection with the Company's Chapter 11 Proceedings and reorganization efforts.

     Net interest expense for the current year second quarter decreased 86.9% to $0.6 million from $4.2 million for the prior year second quarter. Since emergence from the Chapter 11 Proceedings, the Company's primary source of borrowing has been the Securitization Facility as discussed in "Liquidity and Capital Resources". Interest on these borrowings is classified as SG&A expense as a component of Net Credit Income. See "Components of Net Credit Income". Prior to emergence, the Company's primary source of borrowing was the Company's $450.0 million debtor-in-possession credit facility (the "DIP Facility"). All interest paid under this facility was charged to interest expense. The interest expense of $4.2 million recorded in the prior year second quarter represents interest on the DIP Facility.

     The Company's effective tax rate on post-confirmation earnings is 37.0%, resulting in income tax expense of $6.1 million in the current year second quarter. No federal income tax was recorded in the prior year second quarter due to the Company's net operating loss carryforwards.

     As a result of the foregoing, the Company had net income of $10.4 million for the current year second quarter as compared to $2.3 million for the prior year second quarter.

     Sales for the twenty-six weeks ended August 3, 2002 (the "current year") increased 5.9% to $414.2 million from $391.1 million for the twenty-six weeks ended August 4, 2001 (the "prior year "). Comparable store sales increased 6.8%. The increase in comparable store sales in the current year was driven by positive comparable store sales performances in the Company's children's, dresses, misses sportswear, men's, juniors, shoes, accessories, swimwear and home/gifts departments. The lower rate of increase in total sales as compared to the rate of increase in comparable store sales reflects the impact of a fewer number of stores in operation in the current year as compared to the prior year. In the prior year, the Company operated 347 stores throughout most of the period while it operated 342 stores during most of the current year. Stores which have been closed accounted for approximately $6.9 million of the prior year sales.

     Gross profit increased 12.1% to $132.4 million for the current year from $118.2 million for the prior year. Gross profit, as a percent of sales, increased to 32.0% for the current year from 30.2% for the prior year. The gross profit percentage for the current year as compared to the prior year benefited from, among other things, (i) a higher maintained mark-up on beginning of year inventory, (ii) a higher initial mark-up on new receipts, (iii) a reduction in the shrink accrual rate from 1.8% of sales in the prior year to 1.6% in the current year as a result of favorable results of recent store physical inventories taken and ongoing loss prevention enhancements and (iv) approximately $2.1 million of lower depreciation in the current year due to the basis reduction to recorded property, equipment and leasehold improvements which occurred in the third quarter of the prior year as part of the fresh-start adjustments. The gross margin rate is historically higher in the first quarter due to the merchandise mix content and promotional calendar. The second quarter generally reflects a lower margin rate as the Company transitions from spring and summer to "back-to-school" and fall merchandise while the fourth quarter is lower due to increased promotional activities and the relative short clearance period for fall and winter merchandise in the markets the Company operates. See "Seasonality and Inflation".

     Selling, general and administrative expenses for the current year decreased 5.4% to $86.5 million from $91.4 million in the prior year and, as a percent of sales, decreased to 20.9% from 23.4% in the prior year. The primary cause of the decrease in SG&A expenses was an increase in net credit income. Net credit income was a reduction to SG&A expenses of $7.3 million in the current year compared to $2.8 million in the prior year. For a detailed analysis of the components of net credit income, see "Components of Net Credit Income". The remaining improvement as a rate of sales is primarily due to lower utility and advertising expenditures, lower incentive compensation expense, improved leverage of SG&A expenses, and approximately $0.6 million of lower depreciation expense as discussed in the preceding paragraph.

     Store opening costs in the current year of $0.4 million relate to the seven new stores opened during the current year. The Company had no store openings in the prior year.

     The Company incurred $8.4 million of reorganization items and store closure costs in the prior year primarily related to professional fees paid in connection with the Company's Chapter 11 Proceedings and reorganization efforts.

     Net interest expense for the current year decreased 90.3% to $0.9 million from $9.7 million for the prior year. Since emergence from the Chapter 11 Proceedings, the Company's primary source of borrowing has been the Securitization Facility as discussed in "Liquidity and Capital Resources". Interest on these borrowings is classified as SG&A expense as a component of net credit income. See "Components of Net Credit Income". Prior to emergence, the Company's primary source of borrowing was the Company's DIP Facility. All interest paid under this facility was charged to interest expense. The interest expense of $9.7 million recorded in the prior year represents interest on the DIP Facility.

     The Company's effective tax rate on post-confirmation earnings is 37.0%, resulting in income tax expense of $16.5 million in the current year. No federal income tax was recorded in the prior year due to the Company's net operating loss carryforwards.

     As a result of the foregoing, the Company had net income of $28.1 million for the current year as compared to $8.7 million for the prior year.

     The following tables provide a detailed analysis of the components of net credit income for each applicable period included in selling, general and administrative expenses (in thousands):

* Percentages may not foot due to rounding

     The following unaudited Consolidated Proforma Statement of Operations reflects the financial results of the Company for the thirteen and twenty-six weeks ended August 4, 2001 as if the Plan had been effective and all store closures related to the Company's reorganization had been completed as of the beginning of fiscal 2001. All amounts are stated in thousands, except for per share data.

______________________________________

______________________________________

     Historically, the Company's business is seasonal and sales traditionally are lower during the first three quarters of the year (February through October) and higher during the last three months of the year (November through January). The fourth quarter usually accounts for about 30% of the Company's annual sales, with the other quarters accounting for approximately 22% to 24% each. The sales levels and gross profit margins achieved on a quarterly basis are impacted by the changes in seasonal weather patterns as well as the level of promotions associated with the traditional holiday period or other events (e.g., back-to-school sales) which tend to impact consumer demand for apparel. The Company's stores are primarily located in the south central states which means the Company tends to experience a longer term of warmer weather patterns and cold weather periods tend to be relatively short in duration and severity. Consequently, the transition period to exit warm weather clothing tends to be longer (e.g., shorts and short sleeve apparel for back-to-school) than for fall and winter merchandise.

     Working capital requirements fluctuate from month to month during the year and generally reach their highest levels during October and November in conjunction with the inventory built in advance of the fourth quarter holiday sales period.

     The Company does not believe that inflation had a material effect on its results of operations during the past two years. However, there can be no assurance that the Company's business will not be affected by inflation in the future.

     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 and (iv) the Financing Agreements.

     In conjunction with the Company's emergence from the Chapter 11 Proceedings, on the Effective Date the Company entered into a three year, $125.0 million senior secured revolving credit facility (the "Revolving Facility"), and a three year, $200.0 million accounts receivable securitization facility (the "Securitization Facility") (collectively, the "Financing Agreements"). The initial proceeds from the Securitization Facility were used by the Company to (i) repay the total amount outstanding under the Company's $450.0 million debtor-in-possession credit facility (the "DIP Facility") as of the Effective Date, (ii) make certain payments under the Plan in connection with priority claims, administrative claims and secured claims and (iii) pay related transaction costs, fees and expenses. On a go-forward basis, the Financing Agreements are used by the Company, in conjunction with other liquidity sources, to provide financing for working capital, letters of credit, capi tal expenditures, interest payments and other general corporate purposes. Substantially all of the Company's assets are pledged as collateral under the Financing Agreements.

     Total working capital increased to $257.1 million at August 3, 2002 from $237.5 million at February 2, 2002, an increase of $19.5 million. Cash flow from operations of $53.5 million was used to finance $23.5 million of capital expenditures, reduce the Securitization Facility borrowings by $25.0 million and to pay long-term debt of $0.2 million.

     The Company has had an increase in inventory in the current year of approximately $20.2 million while inventory decreased approximately $26.6 million in the prior year. Approximately $15.3 million of the decrease in the prior year was associated with the liquidation of inventory in closing stores. In addition, the Company has had a higher level of receipts in the current year as compared to the prior year due to (i) the lower inventory level at the beginning of the year, (ii) the net five new stores opening in the current year and (iii) the timing of receipts with the current year July being approximately $10.0 million higher than the prior year July.

     Borrowings under the Revolving Facility are limited to the availability under a borrowing base that is determined on eligible inventory, while borrowings under the Securitization Facility are limited to eligible accounts receivable generated under the Company's private label credit card program. Borrowings under both facilities are payable upon maturity at August 24, 2004. The daily interest rates under the Revolving Facility are determined by a base rate or Eurodollar rate plus an applicable margin as set forth in the Revolving Facility agreement. Amounts outstanding under the Securitization Facility are funded by the issuance of commercial paper in the open market through a conduit at various rates and maturities. As a result, the daily interest rates under the Securitization Facility are based upon the periodic commercial paper rates of the applicable conduit purchasers. If the commercial paper market is unavailable, amounts outstanding under the Securitiza tion Facility will be funded by liquidity providers with interest at the Eurodollar rate plus 2.0%. The Company pays a standby fee to the liquidity providers equal to a per annum rate of 0.5% of the total amount of their respective commitments under the Securitization Facility. On August 3, 2002, there were no borrowings outstanding under the Revolving Facility, while borrowings under the Securitization Facility, which are accounted for off-balance sheet, totaled $140.0 million. On August 3, 2002, excess availability under the Revolving Facility, net of letters of credit outstanding of $21.6 million, was $103.4 million, while excess availability under the Securitization Facility was $60.0 million.

     Working capital requirements fluctuate from month to month during the year and generally reach their highest levels during October and November in conjunction with the inventory build in advance of the fourth quarter holiday sales period. As a result, borrowings are usually at their highest levels, and conversely, excess availability is at its lowest level, during this period. As borrowing requirements increase during peak periods, the Company expects to utilize the excess availability under the Securitization Facility prior to borrowing under the Revolving Facility due to the favorable cost of funds under the Securitization Facility as compared to the Revolving Facility.

     The Company continually monitors its liquidity position and compliance with its Financing Agreements. The Revolving Facility contains covenants which, among other things, restrict the (i) incurrence of additional debt and incurrence of capital lease obligations, (ii) payment of dividends and other payments to shareholders (iii) aggregate amount of capital expenditures and (iv) transactions with related parties. In addition, the Revolving Facility requires the Company to maintain compliance with specific financial covenants, including specified Leverage Ratio, Fixed Charge Coverage Ratio and Tangible Net Worth levels calculated quarterly. Further, the Securitization Facility describes certain conditions and events that could cause an early amortization of the amounts then outstanding under the Securitization Facility. These include such things as the Company not maintaining compliance with certain financial covenants, having a material adverse change in the abilit y of the Company to perform its obligations under the Securitization Facility, having a material adverse change in the collectibility of the accounts receivables and other specific conditions and events. Each facility contains cross default provisions. At August 3, 2002, the Company was in compliance with all debt covenants of the Financing Agreements.

     The Company's only long-term debt obligations consist of a $0.7 million (net of current portion of $0.2 million) capital lease in the form of an industrial revenue bond with annual funding requirements of $0.2 million and an approximate $8.9 million obligation under the Company's frozen defined benefit pension plan. The minimum funding requirement for 2002 under the defined benefit pension plan of approximately $2.0 million has been made as of August 3, 2002. The Company expects future cash flow from operations to be sufficient to fund these obligations and to make the necessary working capital and capital expenditure investments.

     On July 29, 2002, the Board of Directors approved a stock repurchase program authorizing the Company to buy, from time to time during its 2002 fiscal year, up to $15.0 million of shares of its common stock. Additional amounts of its outstanding common stock may also be repurchased using the proceeds that the Company receives from the exercise of options under its 2001 Equity Incentive Plan, including the tax benefits which will accrue to the Company from the exercise of these options. During the second quarter ended August 3, 2002, the Company purchased 119,300 shares at a cost of approximately $3.0 million. As of September 13, 2002, the Company had purchased 588,100 shares at a cost of approximately $13.1 million.

     Capital expenditures are generally for new store openings, remodeling of existing stores and facilities, customary store maintenance and operating and information system enhancements and upgrades. Capital expenditures were $23.2 million in the current year as compared to $4.9 million in the prior year. Management estimates that capital expenditures will be approximately $45.0 million during 2002, principally for a new point of sale system, warehouse management system, the opening of fourteen new stores and remodels and relocations of existing stores. 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.

Accounts Receivable Securitization

     The Company transforms accounts receivable into securities that are sold to investors, a process referred to as securitization. The Securitization Facility is the agreement through which these securities are sold to outside investors. The Securitization Facility, which is an off-balance sheet financing vehicle, is an important source of the Company's liquidity. Further, the Securitization Facility provides the Company with a lower cost of financing as compared to the Company's Revolving Facility. In accordance with the terms and requirements of the Securitization Facility, the Company transfers all of the accounts receivables generated by the holders of the Company's private label credit card that meet certain eligibility requirements to a special purpose master trust (the "Trust"). The accounts receivable held in the Trust collateralize borrowings under the Securitization Facility, and the Trust is operated in a fashion intended to ensure that its assets and liabilities are distinct from those of the Company and its other affiliates. The Trust sells certificates representing undivided interests in the accounts receivables to outside investors (the "Sold Interests"). The amount of the Sold Interests outstanding at any time represents the amount of the Company's off-balance sheet debt (also referred to as borrowings under the Securitization Facility). The Company retains the remaining undivided interest in the Trust in the form of a subordinated transferor certificate, an exchangeable transferor certificate, as well as possessing the right to receive the excess cash receipts from the receivables over those contractually required to be paid to the Sold Interests (collectively, the "Retained Interest"). The Company's right to proceeds from the collection of the receivables under its Retained Interest is subordinate to the rights of the Sold Interests.

     The Sold Interests are represented by Class A certificates. The holders of the Class A certificates are entitled to monthly interest distributions at the contractually defined rate of return of periodic commercial paper rates plus 0.37%. The interest distributions to the Class A certificate holders are payable from finance charge income generated by the credit card receivables held by the Trust. The Company services the credit card receivables held by the Trust and receives a servicing fee of 2.0% of the outstanding Sold Interests.

     The credit quality of the Class A certificates is enhanced as a result of the Company's subordinated position as the Company bears virtually all investment risk with respect to both the Sold Interests and the Retained Interests. However, neither the outside investors holding the Class A certificates nor the Trust have any recourse against the Company beyond the Retained Interest. The Company is entitled to receive distributions equal to the excess of finance charges and fees on the credit card receivables held by the Trust over the sum of amounts distributed to the holders of the Class A certificates and credit losses.

    For securitization programs such as this, which are accounted for as sales under SFAS 140, the Company is required to remove the related credit card receivables, as well as the amount of borrowings outstanding under the Securitization Facility, from the Company's consolidated balance sheet. The securitization and sale of credit card receivables changes the Company's interest in these receivables from that of lender to that of servicer, with a corresponding change in the timing and the manner in which revenues are recognized. For securitized credit card receivables accounted for as sales, amounts that otherwise would have been recorded as net service charge and late fee income when billed, as well as provisions for bad debts, are instead reported as gains on sale of accounts receivable and gains (losses) on the change in fair value of the retained interest of receivables sold (see Note 2 to the Unaudited Consolidated Financial Statements).

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and is effective for the Company beginning February 2, 2003. The adoption is not expected to have a material effect on the Company's financial position or results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company adopted SFAS No. 144 effective February 3, 2002. The adoption did not have a material effect on the Company's financial position or results of operations.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 clarifies guidance related to the reporting of gains and losses from extinguishment of debt and resolves inconsistencies related to the required accounting treatment of certain lease modifications. SFAS No. 145 also amends other existing pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The provisions relating to the reporting of gains and losses from extinguishment of debt become effective for the Company beginning February 2, 2003 with earlier adoption encouraged. All other provisions of this standard are currently effective for the Company and did not have a significant impact on the Company's financial condition or results of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires costs associated with exit or disposal activities to be recognized when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is effective for the Company beginning February 2, 2003. The Company is currently evaluating the impact of this provision will have on its future results of operations and financial condition.

     Borrowings under the Company's Securitization Facility, which totaled $140.0 million at August 3, 2002, bear a floating rate of interest. A hypothetical 10% change in interest rates from the August 3, 2002 levels would have an approximate $0.1 million effect on the Company's annual results of operations on a pre-tax basis and on cash flows.

     During the fiscal quarter ended August 3, 2002, the Company did not have any new material legal proceedings brought against it, its subsidiaries or their properties. 

     As reported in the Company's Form 10-K for the year ended February 2, 2002, on November 3, 2000, Stage Delaware received a copy of the United States Securities and Exchange Commission's (the "SEC") August 3, 2000 Order Directing Private Investigation In the Matter of Stage Stores, Inc. (the "SEC Order"). The SEC Order is a confidential document directing a non-public investigation into related party transactions previously reported by Stage Delaware on Form 8-K dated March 9, 2000. The Company cooperated with the SEC in the investigation. By letter dated June 25, 2002, the staff of the SEC advised the Company that pursuant to the SEC's guidelines and limitations discussed in the letter, it does not intend to recommend the commencement of an enforcement proceeding against the Company in this matter.

     No other material developments occurred in connection with any previously reported legal proceedings against the Company, its subsidiaries or their properties during the last fiscal quarter.

     None

     None

The 2002 Annual Meeting of Shareholders of the Company was held on May 22, 2002. The following matters were submitted to a vote of the Company's shareholders:

     1. Election of Directors. The election of nine directors (constituting the entire board of directors) for the ensuing year and until their successors are duly elected and qualified. The results of the election for each such director were as follows:

     2. Appointment of Auditors. The ratification of the selection of Deloitte & Touche LLP as the auditors to audit the consolidated financial statements of the Company and the financial statements of certain of its subsidiaries for the year ending February 1, 2003. The results of the vote with respect to such proposal were as follows:

     In Favor Of                Against                    Abstain

     17,988,806                  162,764                      5,549

     3. Approval of Material Terms of Executive Officer Performance Goals. The results of the vote with respect such proposal were as follows:

     In Favor Of                Against                    Abstain

     17,898,426                  246,399                      12,294 

1. Exhibits

See "Exhibit Index" at page 28.

2. Reports on Form 8-K

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.

September 17, 2002                                                                                                                       /s/ James R. Scarborough

                                                                                                                                                         James R. Scarborough

                                                                                                                                                        Chief Executive Officer and President

September 17, 2002                                                                                                                       /s/ Michael E. McCreery

                                                                                                                                                         Michael E. McCreery

                                                                                                                                                         Executive Vice President, Chief Financial Officer and Secretary

I, James Scarborough, Chief Executive Officer of Stage Stores, Inc., certify that:

1. I have reviewed this 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; and
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 Stage Stores, Inc. as of, and for, the periods presented in this report.

September 17, 2002                                                                                                                     /s/ James R. Scarborough

                                                                                                                                                        James R. Scarborough

                                                                                                                                                        Chief Executive Officer

I, Michael E. McCreery, Chief Financial Officer of Stage Stores, Inc., certify that:

1. I have reviewed this 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; and
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 Stage Stores, Inc. as of, and for, the periods presented in this report.

September 17, 2002                                                                                                                     /s/ Michael E. McCreery

                                                                                                                                                       Michael E. McCreery

                                                                                                                                                       Chief Financial Officer

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

_______________________________

* Filed electronically herewith