Report: Bon-Ton Preparing for Potential Bankruptcy

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photo credit: The Bon-Ton Stores

It seems the only companies making any money lately are those that specialize in restructuring retail businesses.

Add The Bon-Ton Stores to the list of retailers hiring turnaround advisers. The Wall Street Journal reports the retail chain has enlisted the help of PJT Partners to help it figure out how to continue in the face of ballooning debt and deflated sales.

Citing unnamed sources, the publication says Bon-Ton needs to refinance more than $900 million in debt and prepare for a potential bankruptcy.

The company, which operates 260 stores in 24 states under a variety of nameplates, including Bergner’s, Herberger’s and Younkers, had already retained AlixPartners in a bid to overhaul its operations. In April, Bon-Ton landed on S&P’s list of retailers most likely to default due to its $63 million losses in 2016.

[Read what a turnaround specialist says about today’s retail environment: Turnaround Specialist Michael Appel on the Three Cs: Capital, Culture and a Consumer Focus]

The company has $226 million available to it under a revolver, which has been extended to 2022 and should provide enough liquidity for it to continue as a going concern.

Bon-Ton reported a net loss of $33.2 million, or $1.64 per share during the second quarter. The company issued a loss per share guidance of $2.08 to $2.59. It only anticipates a slight improvement in comp store sales, which for the second quarter were down by 6.1%.

Looking at the chain’s productivity, Green Street Advisors says the department store would need to cut 15 percent of its existing store base to reach the sales per square foot it enjoyed in 2006.

The company has seen positive performance from national brands like Under Armour and Tommy Hilfiger as well as good sales trends in fine jewelry, young men’s and denim. Going forward, the retailer plans to grow its home décor and furniture assortments, which have been among the few bright spots.

These few wins haven’t been enough however.

If Bon-Ton does file for bankruptcy protection, it will join a growing list of mall-based apparel chains like The Limited and BCBG that have done the same in the last year.


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