Stage Stores drives onward with off-price conversions
A majority of Stage Stores Inc. stores will operate under the Gordmans off-price banner by the end of next year.
Stage plans to convert an additional 100 stores to Gordmans off-price in 2020, bringing the total number of 2020 off-price conversions to 250. In 2019, the company expects to complete 89 conversions, including 37 converted stores in March, 35 converted stores and one new store in June, and 17 planned conversions in September.
The company expects to end fiscal 2019 with 158 Gordmans stores. Inclusive of the 100 additional conversions planned for next year, the 2020 Gordmans store count will now exceed 400 stores, and 2020 Gordmans sales are expected to be well in excess of 50% of total company sales.
“The continuation of strong performance in prior period conversions, in addition to the outstanding initial results in our June conversions, provided the impetus for us to expand our 2020 pivot to off-price,” said Michael Glazer, president and CEO, Stage Stores. “With more than 80 conversions already completed in 2018 and 2019, we have now reached a critical mass of off-price stores that are providing a significant positive impact to our results. Importantly, the smaller market stores that converted in 2018 are now approaching their one-year anniversary as Gordmans and continue to deliver sales that are approximately double their volume as department stores.”
Stage has been able to reduce its capital spend per conversion to approximately $80,000 per store, including a lower-cost test at a capital cost of $40,000 per conversion this September. The company will provide sales and earnings results and full-year outlook at the conclusion of the second quarter. In conjunction with the expansion of the off-price conversion strategy, the 2019 capital guidance is updated to $30 million from the previous guidance of $30 million to $35 million, and the 2019 store closing guidance is updated to 55 to 60 from the previous guidance of 40 to 60.
As of July 23, 2019, the company operates in 42 states through 645 Bealls, Goody’s, Palais Royal, Peebles, and Stage specialty department stores and 141 Gordmans off-price stores, as well as an e-commerce website.
Stage Stores acquired 48 stores and a distribution center from Gordmans in March 2017 after Gordmans filed for bankruptcy and decided to liquidate. It turned the acquired chain into an off-pricer to successful results — so successful that Stage Stores has been converting its own stores to the off-price banner.