HOUSTON (NYT) -- Fourteen months after financial woes forced Stage Stores to seek Chapter 11 bankruptcy, the Houston-based retailer has completed its financial reorganization and emerged from bankruptcy protection.
Stage President Jim Scarborough said the bitter medicine of bankruptcy has made the company stronger and poised for prosperity.
"We've gone from a train wreck a year ago to one of the most profitable retailers in the country," Scarborough said after the company announced its escape from Chapter 11. Stage reports that its same-store sales are up 19 percent so far this year. In the current economic environment, most retailers are happy to grab same-store gains of a few percentage points.
"This is a healthy, viable company once again," Scarborough said.
Escaping money trouble forced Stage to axe 249 underperforming stores. It has gone from 591 locations down to 342 stores operating under the Stage, Bealls and Palais Royal names.
The majority of the company is now owned by creditors who were owed millions by Stage, which had debts of $600 million when it filed under Chapter 11. Those creditors now own 85 percent of Stage's newly issued stock, with the repayment estimated to be worth about 48 cents for every dollar the creditors were owed. The remaining 15 percent of the new stock has been reserved for stock-option grants to the company's management. The holdings of former shareholders were wiped out by the bankruptcy.
Many of Stage's financial problems can be traced to a buyout binge and an inability to digest its many acquisitions, including the 240- store, Oklahoma City-based C.R. Anthony chain that Stage bought in 1997.
In the early going, Stage's rapid growth made it the darling of Wall Street. At its zenith, Stage had just over 700 stores, and its stock price boomed to record levels.
But the spree outstripped Stage's ability to manage the stores.
