Stage Stores Inc. announced plans to convert substantially all its stores to off-price.
Based on the success of the conversion strategy, the company plans to begin converting its remaining department stores in February of 2020, and expects to be operating approximately 700 predominantly small-market Gordmans off-price stores by the third quarter of fiscal 2020. A limited number of stores may continue to operate under their existing department store nameplates until closure is permitted by lease. The company plans to close approximately 40 stores during fiscal 2020. Capital spend in fiscal 2020, inclusive of all conversion activities, is expected to be approximately $30 million.
We are excited about our future as we fully transition to an off-price business model,” said Michael Glazer, chief executive officer. “Since 2018, we have converted 98 department stores to off-price, including 17 small market conversions which are grand opening today in Michigan, Pennsylvania, Ohio, Kentucky, and Tennessee. Compared to their performance as a department store, off-price conversions have consistently delivered higher sales with less inventory, similar retail margins, and lower SG&A. Additionally, with the success of our recent tests of lower cost conversions, we are able to execute our fiscal 2020 conversion strategy while maintaining our capital spend in line with fiscal years 2018 and 2019.
The performance of our converted stores clearly demonstrate that this strategy is working, as evidenced by our positive second quarter comparable sales momentum which has accelerated during the third quarter. Our future is bright and we are grateful to our dedicated associates and vendor partners for their continued support during our transformation. We believe this pivot from department stores to off-price will increase shareholder value and drive sustainable growth.”
As of September 17, 2019, Stage Store operates in 42 states through 625 Bealls, Goody’s, Palais Royal, Peebles, And Stage specialty department stores and 158 Gordmans off-price stores, as well as an e-commerce website at www.stage.com.
