Stage Stores ramping up off-price store conversion program
Stage Stores is going off-price in a big way.
The department store retailer announced it will convert approximately 220 additional department stores to its Gordmans off-price banner by the middle of 2020, starting with some 70 stores this year. The 2019 conversions will occur predominantly in the smaller, Midwestern markets where the company said it has seen outstanding results to date.
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 started converting some of its own stores to the off-price model. By the end of 2020, Stage Stores expects to have nearly 300 Gordmans off-price stores, representing almost 50% of the company’s total sales volume.
“The results of department stores converted to off-price continue to exceed our expectations, with smaller stores more than doubling their volume after conversion,” said Michael Glazer, president and CEO, Stage Stores. “Off-price stores, when compared to our department stores, also benefit from a higher penetration of outperforming non-apparel categories. As a result, off-price comp sales once again increased during the holiday period, despite the headwind created by the November 2017 marketing relaunch.”
With the acceleration of the conversion of department stores to the off-price model, Stage Stores will suspend its quarterly dividend. It expects to spend approximately $35 million in capital in 2019.
Stage Stores also reported comparable sales for the holiday period. On a shifted basis, which compares the nine-week period ended January 5, 2019 compared to the nine-week period ended January 6, 2018, Gordmans off-price stores’ same-store sales increased 2.4%, department stores comparable sales decreased 0.4%, and total company comparable sales increased 0.1%. E-commerce continued its trend of double digit sales growth.
As of January 14, 2019, Stage Stores operates 752 stores in 42 states through its Bealls, Goody’s, Palais Royal, Peebles and Stage specialty department store brands and 68 Gordmans off-price stores.