Discount retailer Stage Stores filed for bankruptcy Sunday with plans to sell its business after the coronavirus crisis threw a wrench into 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 pandemic 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,” CEO Michael Glazer said in a statement.
Stage 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.
The coronavirus crisis hit just as Stage was working to transform all its stores into off-price shops under the Gordmans brand, which currently has 289 locations, company court filings say.
Stage’s plans 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.
But the COVID-19 pandemic scuttled those plans as Stage shuttered its stores and accumulated roughly $31 million in past-due rent bills, according to court records.
“In this new reality and complete uncertainty, absent a third-party investor or purchaser, Stage Stores does not have the liquidity to implement its plan and continue operations,” Elaine D. Crowley, the company’s newly minted chief restructuring officer, said in a Monday court filing.
Stage is just the latest retailer to file for bankruptcy amid the coronavirus pandemic, which led US retail sales to fall by a record 8.7 percent in March. Upscale chains J.Crew and Neiman Marcus both started the Chapter 11 process last week.
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