Stage Stores Inc (NYSE:SSI) is a Houston-based retailer that operates both department and off-price stores primarily in small and mid-sized towns and communities. Its department stores, which operate under the Bealls, Goody’s, Palais Royal, Peebles and Stage brands, offer moderately priced, nationally recognized brand name and private label apparel, accessories, cosmetics and footwear for the entire family. Its off-price stores, which are called Steele’s, offer brand name family apparel, accessories, footwear and home merchandise at significant savings to department store prices. Stage Stores operates more than 864 stores in 40 states.
Stage Stores was formed in 1988 when the management of Palais Royal, together with several venture capital firms, acquired the family-owned Bealls and Palais Royal chains. It has pursued a growth strategy focused on expanding the company’s presence in small markets. In 2010, Stage Stores began developing its off-price concept with the goal to leverage its small market expertise with a complementary format to its department store model. Steele’s, its off-price concept, was launched Nov. 1, 2011 with the opening of three stores. Stage Stores currently operates 34 Steele’s stores across seven states and plans to increase the number of off-price stores to 150 by 2015.
Stage Stores is the country’s leading small town retailer, with 65% of stores and 59% of sales in towns with a population below 50,000, which are under-served markets with limited competition. It differentiates itself from the competition in small and mid-sized communities by offering consumers access to both basic and fashionable brand name merchandise not typically carried by other retailers in the same area.
Stage Stores adopts a brand-focused merchandise marketing strategy to support each store’s position as the local destination for basic and fashionable, moderately priced, brand name merchandise. Apparel and cosmetics accounted for 97% of Stage Stores’ sales. It carries nationally recognized brands such as Levi Strauss, Nike, Calvin Klein, Chaps, Izod, Dockers, Carters, Jockey, Estee Lauder, Clinique, Nautica, Skechers and New Balance, not to mention Estee Lauder and Clinique treatment products in more than 200 of its stores.
Stage Stores’ small town retail focus has enabled it to develop a unique real estate strategy, with store formats that are smaller than that of typical department stores with an average store size of approximately 18,500 selling square feet. Approximately 87%, 10% and 3% of its stores are located in strip shopping centers, local & regional shopping malls, and free standing & downtown buildings, respectively. Unlike other retailers, Stage Stores attempts to locate its stores in the vicinity of grocery stores, drug stores, and major discount stores such as Wal-Mart Stores, Inc. (NYSE:WMT) that it believes will help attract additional foot traffic to the area. Stage Stores does not compete directly for branded apparel sales with national discounters such as Wal-Mart due to minimal merchandise overlap. Also, its average rent for its 864 stores is $4.15 per square foot, among the lowest in the industry.