Dive Brief:

• Stage Stores has received court approval for its bankruptcy plan, which calls for the liquidation of all its stores and the wind down of the company.
• The company filed for Chapter 11 bankruptcy in May, with a plan to simultaneously liquidate while also searching for a possible buyer.
• According to Law360, real estate developer Ali Choudhri sought more time to buy Stage Stores' business, but Stage Stores attorneys said they were unable to close a deal.

Dive Insight:

The story of Stage Stores' recent history could give an observer whiplash. Less than a year ago, the retailer triumphantly reported a quarter of explosive sales growth, following the conversion of many of its department stores to the off-price Gordmans banner. 

The results were so good it gave the company confidence in its accelerated plan to convert the rest of its remaining stores to the off-price format. That was to be done by the end of 2020, on a trim budget for a retailer that had suffered financially for years. 

But the holidays delivered a disappointing performance, casting doubt on its conversion plans. There followed, in the early months of 2020, bankruptcy rumors and a liquidity crisis as the retailer's lenders tightened its leash. Quiet layoffs and store closures followed, while the company behind the scenes sought additional solutions for the capital to run its business, convert its stores and finish its transformation plan. 

Then the coronavirus found its way to the U.S. In March, Stage Stores had to close its locations along with much of the retail world. All of its troubles to win financing and grow sales were exacerbated by the COVID-19 crisis. Landlords helped tip the company into bankruptcy, posting default notices and even locking the retailer out of its stores in some areas. 

There were skeptics all along that the retailer could pull off its plans. Nearly 100 years old, Stage Stores rolled up numerous department store banners into a retailer formed originally by merging the Bealls and Palais Royal chains. It entered the off-price market by buying Gordmans out of bankruptcy in 2017. 

Gordmans had fallen on hard times along with much of retail, despite the ascendance of off-price giants like TJX Cos. and Ross Stores. Nonetheless, Stage Stores saw its future in the Gordmans model, which promised younger customers and a more popular model than its fading department stores. 

Some were skeptical about Stage Stores' plans to convert to Gordmans so quickly, given the small sample size of stores it based its plans on and its relatively small supply of capital to power the conversions with. The company was at risk of bankruptcy long before COVID-19 came along. Would the retailer have survived, though, in a market absent a pandemic? That question will have to remain a hypothetical, as the retailer winds down its business and prepares to turn off the lights.

Stage Stores isn't the only discounter to enter bankruptcy this year. Stein Mart and Tuesday Morning — both, like Stage, smaller chains without the scale and buying power of the large off-pricers — filed for bankruptcy this year amid the COVID-19 disruption. Not even the best-performing sectors in retail can provide shelter from the pandemic and the industry trends it has accelerated.