Stay naturally follows on from the Sit command. Remain facing him after he sits down, and walk backwards as you say “Stay”. By repetition at lengthening distances as your dog gets used to the training, eventually your dog will succeed at this.
An accompanying gesture is useful; don’t confuse this with another gesture, and because “Stay” will be one of the most frequent commands, use something really simple, for example pointing at where he is sat or a slightly raised hand always in the same position in relation to your body.
In case of any difficulties, Stay is one of those commands that can be reinforced simply with persistence with most dogs. If he comes back to you before you want him to, lead him back to the same spot he was in, get him to Sit then back slowly away again and repeat the process.
A retractable lead could be used but is not advisable in any early stages this might confuse your dog into thinking that you actually want him to come to you because the lead is attached to him. I have seen it recommended and it might be suitable for some situations, especially with a slightly older dog being trained for obedience trials, but with most puppies in my experience this will not work very well.
Stepping over or around your dog while he is in the Stay position will measure your success and may form part of the Stay training. As with Sit, encouraging your dog to Stay until you release him will prove useful. Try to succeed with this command without using food rewards as they will usually be counter-productive.