Bon-Ton Stores has filed for Chapter 11 bankruptcy protection after recently announcing plans to close nearly 50 of its stores. Bon-Ton asked a federal bankruptcy judge to approve procedures for a potential sale of its assets or external investment to continue operations. Bon-Ton CEO Bill Tracy said in a statement, “The actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business.”
Bon-Ton wants to keep stores open by selling the entire company. The company has hired an outside agency to liquidate all of its assets if it can’t find a viable alternative. The retailer said that it’s conducting “constructive discussions” with its creditors to see if there is a viable path forward for the company.
Bon-Ton Stores had about $1.59 billion in assets and $1.74 billion in debt as of Oct. 28. The company’s top unsecured creditors include Estee Lauder, Hanesbrands, Keurig Green Mountain, Michael Kors, Perry Ellis and Ralph Lauren. The company says it has already secured up to $725 million in bankruptcy financing to continue operating. Tracy said, “During this court-supervised process, we plan to continue operating in the normal course and executing on our key initiatives to drive improved performance.”
Bon-Ton Stores is the corporate parent of several department store chains, including Boston Store, Carson’s, Elder-Beerman and Younkers. The company opened its first store in 1854. Bon-Ton currently holds about 24 million square feet of real estate and has 23,000 employees. The company has dual headquarters in New York and Milwaukee.
The company blamed digital competition and smartphone shopping for its demise. The Milwaukee-based retailer has been struggling for years with declining sales and challenged traffic at malls. Bon-Ton’s comparable sales fell 2.9 percent during the holiday season, following a 6.6 percent drop in the third quarter.
Bon-Ton revealed plans to close 47 of its 260 stores on Jan. 31. The company operates stores in 24 states, mainly in the Northeast and Midwest. The store closings began on Feb. 1 and is estimated to take about 10 to 12 weeks. Bankruptcy protection makes it easier for a retailer to break leases and quickly shrink store count.
This is the first big retail bankruptcy of 2018, but everyone is sure it won’t be the last. The retail environment has been very challenging to brick-and-mortar stores. In 2017, several large store chains declared bankruptcy to fix their finances, including Toys ‘R’ Us and HHGregg.