Discount retailer Stage Stores filed for Chapter 11 bankruptcy protection in the Southern District of Texas on Sunday with plans to sell its business after the Coronavirus pandemic stopped its turnaround plans.
The Houston-based owner of the Peebles, Goody’s, and Gordmans chains said it had no choice but to seek a buyer through the Chapter 11 process after the virus forced it to close its 726 stores and furlough more than 14,000 employees.
“This is a very difficult announcement and it was a decision that we reached only after exhausting every possible alternative,” said Michael Glazer, president and chief executive officer at Stage Stores. “Over the last several months, we had been taking significant steps to attempt to strengthen our financial position and find an independent path forward. However, the increasingly challenging market environment was exacerbated by the COVID-19 pandemic, which required us to temporarily close all of our stores and furlough the vast majority of our associates. Given these conditions, we have been unable to obtain necessary financing and have no choice but to take these actions.”
The company has also filed a number of customary motions seeking court authorization to support its operations during the court-supervised process, including the continued payment of employee wages, salaries, and health benefits without interruption for those employees that are working during this time.
Stage Stores said it will reopen its stores by early June to liquidate inventory as part of a plan to wind down its operations, starting with more than 500 locations that will open Friday. The company said it will halt the wind-down plan at certain locations if it gets a viable bid.
As part of the wind‑down, the company expects to honor existing customer programs, including gift cards and returns, for the first 30 days after a store reopens. The company anticipates that it will stop accepting any outstanding gift cards or honoring other customer programs after that time.
This news comes as the retailer was working to transform all its stores into off-price shops under the Gordmans brand, which currently has 289 locations, company court filings say. Its plan to convert about 220 stores to the Gordmans brand by the middle of 2020 helped drive up its stock price earlier this year, even after it missed holiday forecasts, the company said.
The retailer also disclosed that Jason Curtis, executive vice president and chief financial officer, is leaving the company to pursue a career with another retailer, effective May 22nd. Glazer will oversee the finance function, and to support him, the company has retained Rick Stasyszen, who previously served as the company’s senior vice president of finance and controller until 2019.
Added Glazer, “Our associates play a key role in running our stores and serving guests, and I would like to thank them for their hard work and dedication. We recognize that the actions we have taken in response to the market environment and COVID-19 have affected them both professionally and personally. We deeply appreciate their efforts going forward as we begin the process of reopening stores to conduct liquidation sales. We thank our guests for their business and support, as well as our vendors, who help us maintain our assortment of brand-name apparel and stylish home décor. We appreciate the willingness of our landlords and vendors to work constructively with us to try and avoid this outcome. We hope that their efforts and the actions we have taken to reposition the business over the last several months will help attract the right partner who is interested in our off-price concept.”