Stage Stores Inc. closed on its previously announced acquisition of selected assets of Gordmans Stores, Inc.
The sale includes a minimum of 50 Gordmans store leases, with rights to assume leases for an additional seven stores and a distribution center; all of Gordmans’ inventory, furniture, fixtures, equipment and other assets at the 57 store locations; and trademarks and other intellectual property of Gordmans.
Stage expects to pay $35 million to $40 million for the inventory, with the final amount to be determined following the completion of a post-closing physical inventory count and an additional $2 million to $3 million for the other assets. Stage intends to use existing cash and availability under its credit facility to fund both the transaction and any additional investments required to support the integration into the Stage infrastructure.
Stage has planned a reduction in the sales of the Gordmans division this year due to lower inventory levels as it rebuilds the business in time for the holiday season. Accordingly, for the remainder of fiscal 2017, the acquisition is expected to contribute between $230 million and $245 million in revenue and be neutral to earnings, exclusive of acquisition costs. Stage anticipates the addition of the Gordmans stores to be significantly accretive to earnings in fiscal 2018.
The acquisition expands and diversifies Stage’s portfolio with a complementary concept and attractive customer demographics in new Midwest markets. Gordmans will continue to operate as a separate brand, with continuity in store and distribution center staffing. The brand will be centrally operated from Stage’s Houston support center after welcoming talent from the Gordmans team in Omaha.
Michael Glazer, president and chief executive officer of Stage, commented, “Gordmans is well-positioned in Midwestern markets with a strong brand, a loyal customer base, and a significant opportunity to benefit from growth in the off-price segment. We look forward to serving Gordmans’ customers by bringing them great values and providing an engaging shopping experience. We see the opportunity for both Stage and Gordmans to benefit from sharing best practices given the complementary strengths of each of the business models.”
Glazer continued, “We believe this acquisition strengthens our entire portfolio and will enable us to drive improved performance, resulting in greater shareholder value through positive earnings and cash flow.”
Barclays acted as exclusive financial advisor to Stage, and Cravath, Swaine & Moore LLP and McAfee & Taft, P.C. served as legal counsel to Stage.
Stage Stores Inc. operates 796 specialty department stores in 38 states and a direct-to-consumer channel under the Bealls, Goody’s, Palais Royal, Peebles, and Stage nameplates.
