The Bon-Ton Stores, the department store chain that is an anchor tenant at several local shopping malls, has filed for bankruptcy protection and said it will seek a buyer for all, or part, of its business.
Bon-Ton, which has been struggling with sagging sales and a hefty debt load as online shopping has cut into mall traffic, is the biggest retailer to file for bankruptcy this year and follows other bit retailers, such as Toys R Us, Payless ShoeSource and Gymboree Corp., that sought Chapter 11 protection last year.
Bon-Ton's local stores will remain open as it tries to negotiate with its creditors to restructure its more than $1 billion in debt. The retailer last week unveiled plans to close 47 of its stores, including three in New York.
"We are currently engaged in discussions with potential investors and our debtholders on a financial restructuring plan, and the actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business," Bill Tracy, president and CEO of Bon-Ton Stores, said in a statement.
The bankruptcy filing was not a surprise, given Bon-Ton's recent struggles. Sales at stores that had been open for at least a year – an important measure of a retailer's health – fell by 2.9 percent in the final nine weeks of last year, which encompasses the crucial holiday shopping period. That followed a 6.6 percent drop in Bon-Ton's same store sales in the previous quarter.
Bon-Ton has stores in the Town of Tonawanda, Clarence, Hamburg, West Seneca, Lockport, Wheatfield, Lakewood and Olean.
The Pennsylvania-based department store chain missed a $14 million interest payment in December, the grace period for which has since expired. The company’s lenders have granted it more time to potentially negotiate bankruptcy or otherwise restructure its deb, but its negotiations with creditors broke down last week.
Some of Bon-Ton's vendors also had tightened their demands last year before agreeing to provide more inventory to the company, and creditors have been pushing for a bankruptcy filing to recover part of their investment. The company was down to just $7 million in cash, according to a filing the company made last week.
Bon-Ton Stores has 260 locations in 24 states, including furniture galleries and clearance centers. In addition to Bon-Ton, it operates under the names Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers. Some locations will close under each banner.