print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Updated: Debt Load Forces More Bon-Ton Store Closures, Bankruptcy an Option

Department Store Chain Negotiating Debt Restructuring with Bondholders
February 1, 2018
Struggling department store chain Bon-Ton Stores Inc. (OTCQX:BONT) disclosed today that it has entered into restructuring discussions with some of its lenders after failing to make required interest payments last month.

The chain said it has proposed a more comprehensive, two-year reorganization plan with the lenders, including the decision to close or sell more of its stores.

Last November, the chain announced plans to close about 40 stores following sales declines in the third quarter.

Included in that proposal, which Bon-Ton released to its stockholders this morning, was that it was completing a "more stringent review" of its existing store portfolio.

Bon-Ton, with corporate headquarters in York, PA, and Milwaukee, WI, operates 260 stores, which includes nine furniture galleries and four clearance centers, in 24 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers nameplates. Annual revenues are approximately $2.5 billion.

The portfolio includes a number of poorly performing stores that "contribute minimal value," according to the company, and are siphoning working capital and management attention away from the more profitable stores in its chain.

[Editor's Note:This story was updated Feb. 1, 3 pm with the list of store closures and additional information from the company.]

The retailer has been reviewing 100 of its worst-performing stores and decided to close 42 stores; another 20 or more stores that need to be monitored for further signs of deterioration, three others that could be sold.

“As part of the comprehensive turnaround plan we announced in November, we are taking the next steps in our efforts to move forward with a more productive store footprint,” said Bill Tracy, president and CEO for The Bon-Ton Stores. “Including other recently announced store closures, we expect to close a total of 47 stores in early 2018. We remain focused on executing our key initiatives to drive improved performance in an effort to strengthen our capital structure to support the business going forward.”

The common element of the group of stores being, the company said, is that they are located in "dying malls and centers suffering from overwhelming competitive pressures."

The company said it could also generate up to $4 million in rent savings from the anticipated closings across the remainder of its portfolio that it would retain.

With the reduced store portfolio, the company also plans to consider consolidating its number of distribution centers from three to two.

At the same time, Bon-Ton store said there is an opportunity to invest in new store openings, particularly in markets where Macy's has been abandoning space. The company said it has seen a meaningful uptick in sales in markets where Macy's has already closed stores.

Bon-Ton is projecting opening 14 new stores over the next three years.

In its ongoing negotiations, Bon-Ton said it has not yet reached an agreement on mutually acceptable terms and conditions with the noteholders and that there are no assurances that it will.

Meanwhile, the retailer said it is continuing to seek an equity sponsor and also examining liquidation options. The company said it has already obtained liquidation bids for all of its inventory. Those bids would be sufficient to cover its outstanding asset-backed loan agreements, excluding any potential bankruptcy costs.

Earlier this month, Moody's Investors Service downgraded Bon-Ton Stores based on missed interest payment but still within a 30-day grace period, and said the lowered rating reflects a high likelihood of default. Moody's said it believes Bon-Ton's debt level is unsustainable at current levels.

The company has significant leverage, with unadjusted debt/EBITDA expected to exceed 10.9 times by the end of Bon-Ton's current fiscal year; and weak coverage, with EBITDA less capital expenditures expected to be insufficient to cover interest costs, Moody's said.

For the first three quarters of last year, Bon-Ton posted a loss of $135.4 million compared to a loss of $108.1 million for the same period a year earlier. Comparable store sales decreased 6.6% in the period "due to unseasonably warm weather and the continuation of soft mall traffic trends," the company reported.

However, the department store chain hasn't posted a profit since 2012.

Store Closure List
Store, Mall, City, State
Herberger's, Pine Ridge Mall, Chubbuck, Idaho
Carson’s Clearance Center, Aurora Shopping Center, Aurora, Illinois
Carson’s, Riverside Plaza, Chicago, Illinois
Carson's, Village Mall, Danville, Illinois
Carson’s, Northland Plaza, DeKalb, Illinois
Carson’s Clearance Center, Village Plaza, Morton Grove, Illinois
Bergner's, Sheridan Village, Peoria, Illinois
Carson’s, Streets of Woodfield, Schaumburg, Illinois
Carson's, Mounds Mall, Anderson, Indiana
Carson's, Fair Oaks Mall, Columbus, Indiana
Carson's, Concord Mall, Elkhart, Indiana
Carson’s, Circle Centre Mall, Indianapolis, Indiana
Carson's, Five Points Mall, Marion, Indiana
Younkers, College Square Mall, Cedar Falls, Iowa
Younkers, Westdale Mall, Cedar Rapids, Iowa
Elder-Beerman, Kentucky Oaks Mall, Paducah, Kentucky
Elder-Beerman, Adrian Mall, Adrian, Michigan
Carson's, Orchards Mall, Benton Harbor, Michigan
Herberger’s Clearance Center, Birch Run Station, Maplewood, Minnesota
Bon-Ton, Steeplegate Mall, Concord, New Hampshire
Bon-Ton, Phillipsburg Mall, Phillipsburg, New Jersey
Bon-Ton, Aviation Mall, Queensbury, New York
Bon-Ton, Salmon Run Mall, Watertown, New York
Elder-Beerman, Northtowne Mall, Defiance, Ohio
Bon-Ton, The Point at Carlisle Plaza, Carlisle, Pennsylvania
Bon-Ton, The Commons, Dubois, Pennsylvania
Bon-Ton, Millcreek Mall, Erie, Pennsylvania
Bon-Ton, The Johnstown Galleria, Johnstown, Pennsylvania
Bon-Ton, Susquehanna Valley Mall, Selinsgrove, Pennsylvania
Bon-Ton, Nittany Mall, State College, Pennsylvania
Bon-Ton, Stroud Mall, Stroudsburg, Pennsylvania
Bon-Ton, Trexler Mall, Trexlertown, Pennsylvania
Herberger's, Cache Valley Mall, Logan, Utah
Younkers, Fox River Mall, Appleton, Wisconsin
Boston Store, Heritage Village, Beaver Dam, Wisconsin
Elder-Beerman, Eclipse Center, Beloit, Wisconsin
Younkers, Forrest Mall, Fond Du Lac, Wisconsin
Younkers, Lakeshore Edgewater Plaza, Manitowoc, Wisconsin
Younkers, Pine Tree Mall, Marinette, Wisconsin
Boston Store Clearance Center, 5659 S. 27th Street, Milwaukee, Wisconsin
Younkers, Mariner Mall, Superior, Wisconsin
Younkers, Wausau Center Mall, Wausau, Wisconsin
Previously Announced
Bon-Ton, Valley Mall, Hagerstown, Maryland
Younkers, Westwood Mall, Marquette, Michigan
Bon-Ton, St. Lawrence Centre, Massena, New York
Bon-Ton, University Mall, South Burlington, Vermont
Elder-Beerman, Grand Central Mall, Vienna, West Virginia

GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News