Stage Stores, Inc., said Tuesday it will convert substantially all its stores to “off-price.”
“Off-price” retailers are those that buy overstocked goods made by name-brand companies, or which make big purchases of products are on the low-end of a demand cycle. The result is that they are able to price goods to consumers at lower average prices.
Stage Stores operates a store in the University Shopping Center on East Main in Magnolia.
The company said in a statement that based on the recent success of its conversion strategy, it will convert its remaining department stores in February 2020. It expects to be operating approximately 700 predominantly small-market off-price stores under the “Gordmans” name 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, but it has not yet made public which stores will be closed.
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 (Tuesday) 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 (selling, general and administrative expenses). 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,” he said.
Glazer said the performance of the converted stores demonstrate that the strategy is working.
“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.”
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