Bon-Ton floats proposal to restructure, restore finances
Retailer Bon-Ton Stores Inc., which is carrying more than $1 billion in debt as sales continue to drag, said today it is talking to debt holders about potential restructuring plans that would keep the company afloat.
Earlier this month, the company entered into so-called forbearance agreements with lenders and debt holders to hold off on taking any action against the company until Jan. 26 because of a missed $14 million interest payment on a loan.
That agreement has expired, but Bon-Ton said in a filing today with the U.S. Securities and Exchange Commission that restructuring talks are ongoing. However, there are "no assurances," Bon-Ton said, that a mutually acceptable restructuring plan will come together.
Bon-Ton has been flirting with bankruptcy for months and has already said it plans to close at least 40 stores by the end of this year as a way to cut costs. The company, which has dual headquarters in York County and Milwaukee, has not been profitable for much of this decade. Holiday sales dipped 2.9 percent over last year.
Bon-Ton hired PJT Partners and AlixPartners last year to help advise it on a turnaround plan. With the help of those firms, the company has crafted a strategy that it believes can turn things around by 2020.
According to its SEC filing today, the company's plan would focus on four major areas of the business. First, it would conduct a more "stringent review" of its existing stores to see what additional stores could be closed or sold.
Bon-Ton currently has 260 stores in 24 states under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers banners. They include nine furniture galleries and four clearance centers.
As part of the planned store closures, Bon-Ton said it would likely close one of its three distribution centers to save money.
However, company officials also said they would like to invest in new stores, potentially through relocation or by opening in a competitor's closed store. The investment plan, which also calls for remodeling projects, has identified opportunities to open 14 locations through 2020.
Bon-Ton's share of e-commerce sales remains small, so another part of the turnaround plan would be to increase digital marketing and improve site navigation. Right now, e-commerce accounts for about 12 percent of company sales. Bon-Ton would like to increase that to 20 percent.
Officials also sees opportunity to expand the company's private-label brands to increase product offerings and grow Bon-Ton's sales margins. The company's private label brands include Living Quarters, Studio Works, Ruff Hewn, Relativity and Exertek.