Dive Brief:

• Stage Stores plans to close about 200 Gordmans stores and department stores that were slated to be converted into Gordmans, according to three people with knowledge of the company's plans. The company communicated to employees earlier this week that 60 Gordmans stores were closing.
• In all, the retailer would be left with a footprint of about 500 stores, according to the sources. That is ​down from the company's previously announced plans to end the year with 700 Gordmans stores, after converting its remaining fleet to the banner. The company did not respond to a request for comment by press time.
• Closures have begun at many stores, Retail Dive previously reported. The company has also laid off dozens of corporate employees across its business units, with most cuts in its merchandising unit. The exact number of corporate staff let go is not clear because the company has not communicated numbers internally, but three sources estimated that up to 100 jobs were cut. That number does not include workers who will be let go from stores as they close.

Dive Insight:

Last fall, Stage Stores outlined a bold plan to convert its remaining department stores to its off-price Gordmans banner by the end of fiscal 2020. The company declared in a January presentation that "our future is off-price."

In 2019, Stage Stores — which also operates the Bealls, Goody's, Peebles and Palais Royal banners — converted 89 stores to its off-price Gordmans brand. It ended the year with 158 off-price stores, which was 100 more than it had in 2017. Plans called for the company to close 40 stores and convert the rest to Gordmans, which Stage acquired out of bankruptcy in 2017.

But the company's finances have been tight for some time, and holiday sales that fell well short of projections have created a liquidity crisis for Stage. The downturn happened swiftly. As recently as November, executives raised their financial estimates for the year and were projecting optimism about the transformation. 

The retailer has reportedly been working with advisers and lawyers to restructure its debt. A report from Debtwire that Stage had hired Kirkland & Ellis, known in retail for its bankruptcy work, set off concerns among suppliers. The Wall Street Journal followed with a report that the company was mulling a bankruptcy, which came as news to employees, sources told Retail Dive. 

Although employees knew the company was struggling, layoffs and how they played out also took some by surprise. This week, employees in divisions across the company were told to wait at their desk for a call from human resources, to find out if they had a job or not, three people familiar with the process said.  

As it tries to stabilize its finances, Stage is also behind on payments to several of its suppliers, according to four sources with knowledge of the company's supply chain.