With closure of Stage Stores, rural communities lose a staple
Retail woes gutting small-town anchors
The Stage Stores in Alpine, a West Texas town of about 6,000, closed late March when its Houston
parent temporarily shuttered its 738 stores and furloughed virtually all of its employees. On Sunday evening, after filing for bankruptcy protection, temporary will likely become permanent.
The closure leaves a gaping hole in rural communities such as Alpine, where Stage Stores was the only place in town to buy clothes.
“With Stage closing we’re kind of screwed,” Geo Calderon, an Alpine resident. “We’ll have to go two hours to Midland.”
Stage Stores and its sibling brands — Gordmans, Bealls and Palais Royal — were for decades staples of rural communities across the country, and their clo
sure not only means longer treks for clothing, but one less gathering place for locals.
“They’re a place where they can renew their social ties in a community,” said Charles Tolbert II, a sociology professor at Baylor University who specializes in rural communities. “To me it’s a lot more than just a retail business, especially the ones that have the sort of reputation that Stage has — of hanging in there.”
He’s concerned, he said, that the end of Stage Stores marks yet another loss of a small-town institution.
“It’s just one less place for people to employ their social capital, to interact with one another, to build social networks,” he said. “And it becomes a real problem for communities.”
Diane Pleasants, of Waxahachie, a town of fewer than 30,000 just south of Dallas, said she’s watched town anchors like Bealls and JC Penney struggle, and lamented the rise of online shopping.
“I like to browse,” she said, noting she tries to pass the affinity on to her grandchildren.
Heading out to the store also gives seniors some needed exercise and social activity, she said.
Shopping around at Waxahachie’s department stores — or going “hunting” she said with a laugh — is a fun pastime. Inevitably, she runs into people she knows.
“It’s just kind of a small-town vibe,” she said.
Consolidating, stumbling
Stage Stores was formed in 1988 with the merger of Palais Royal and Bealls, family-owned department store chains founded in the 1920s in Texas. Bain Capital, a buyout firm started by Mitt Romney in 1984, financed most of the deal with junk bonds.
The company rolled up department stores in small towns without access to malls and other apparel retailers, growing its footprint to the point that some 60 percent of its locations were in towns with fewer than 50,000 residents
Bain took the company public in 1996, and it filed for Chapter 11 bankruptcy two years later.
More recently, Stage Stores had been rethinking its approach, investing $30 million to convert its aging department stores to its off-price Gordmans brand, selling brand-name goods at a fraction of the price of department stores.
When it filed for bankruptcy protection Sunday, Stage Stores said in filings that it was looking for a buyer and planned to reopen its more than 700 stores in the coming weeks, but only to liquidate inventory.
“Over the last several months, we had been taking significant steps to attempt to strengthen our financial position and find an independent path forward,” Chief Executive Michael Glazer said in a statement. “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.”
In a Tuesday filing with the Securities and Exchange Commission, the company disclosed that Jason T. Curtis, its chief financial officer and treasurer, tendered his resignation May 8 “to pursue a career with another retailer.” His last day is to be May 22. “Mr. Curtis’ resignation did not involve any disagreement with the company with regard to its operations, policies or practices,” the filing said, adding that Glazer would oversee finance functions.
Money woes
Stage Stores isn’t the only retailer struggling in this retail environment, said Reshmi Basu, an editor for Debtwire, and the trouble began long before the novel coronavirus sent the economy into recession.
“There was already kind of a retail apocalypse heading into COVID-19,” she said. “This just creates almost a sort of death knell for the industry.”
Basu said retailers are rife with liquidity problems at the moment, and it would be costly and challenging for a potential buyer to obtain financing. “And then it becomes a question of what’s the collateral,” she said.
Christina Boni, a vice president at debt rating agency Moody’s, agreed that the environment does not lend well to leveraging retail companies, making buyouts less likely.
“It makes it less attractive from that standpoint,” she said.
That would be of little consolation to Ida Schossow, president of the Greater Orange Area Chamber of Commerce.
The Stage Store in Orange, the easternmost city in Texas, has been around long enough to have been a Bealls before the merger. With its closing, she said, the nearest mall is 30 minutes away.
“It has been a staple in our community for a long time,” she said. If the store shutters, she said, “it’ll be a loss for the community.”