Stage Stores’ transformation into an off-price retailer has hit some snags.
The retailer is preparing for a financial restructuring that could include a bankruptcy filing, reported The Wall Street Journal. According to the report, Stage Stores has been late in paying its vendors amid a cash crunch.
Stage Stores is in the middle of a major reorganization. In September, the retailer, whose brands include Bealls, Goody's, Palais Royal, Stage and Peebles, announced plans to convert its entire store fleet to its off-price Gordmans banner, with a goal of reaching approximately 700 total off-price stores by mid-2020. As part of the overhaul, the company said it expected to close 40 locations during fiscal 2020. (Stage Stores entered the off-price channel in 2017 with its acquisition of Gordmans.)
But amidst the revamp, the retailer recently guided for earnings to come at the low-end of fiscal year 2019 guidance. The revision punctuated a challenging holiday period for the retailer in which its 1.4% comp store increase missed expectations, setting off liquidity concerns, said two sources involved in the company’s supply chain, according to an emailed report in late January from Debtwire.
Stages Stores has brought on the investment bank and financial services firm Peter J Solomon and law firm Kirkland & Ellis as it looks to refinance its bank debt, according to the report.