Struggling department store chain Bon-Ton Stores Inc. (OTCQX: BONT) disclosed today that it has actually participated in restructuring discussions with some of its lenders after cannot make necessary interest payments last month.
The chain said it has actually proposed a more detailed, two-year reorganization plan with the lenders, including the decision to close or offer more of its shops.
Last November, the chain revealed plans to close about 40 stores following sales decreases in the third quarter.
Consisted of in that proposition, which Bon-Ton launched to its stockholders this morning, was that it was completing a “more strict review” of its existing shop portfolio.
Bon-Ton, with corporate headquarters in York, PA, and Milwaukee, WI, runs 260 shops, which includes 9 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. Yearly profits are roughly $2.5 billion.
The portfolio includes a variety of poorly carrying out shops that “contribute very little value,” according to the business, and are siphoning working capital and management attention far from the more lucrative shops in its chain.
[Editor’s Note: This story was upgraded Feb. 1, 3 pm with the list of shop closures and extra information from the company.]
The retailer has actually been evaluating 100 of its worst-performing shops and chose to close 42 shops; another 20 or more shops that need to be kept an eye on for additional signs of degeneration, three others that might be offered.
“As part of the comprehensive turnaround strategy we revealed in November, we are taking the next actions in our efforts to move forward with a more productive store footprint,” stated Costs Tracy, president and CEO for The Bon-Ton Stores. “Including other just recently announced store closures, we anticipate to close an overall of 47 stores in early 2018. We stay focused on executing our key initiatives to drive enhanced performance in an effort to strengthen our capital structure to support the business moving forward.”
The typical aspect of the group of shops being, the business said, is that they are located in “dying malls and centers struggling with overwhelming competitive pressures.”
The business said it could also produce up to $4 million in lease cost savings from the awaited closings across the remainder of its portfolio that it would keep.
With the minimized store portfolio, the business likewise prepares to consider combining its variety of distribution centers from 3 to two.
At the very same time, Bon-Ton store stated there is a chance to purchase new shop openings, especially in markets where Macy’s has actually been deserting space. The company said it has seen a significant uptick in sales in markets where Macy’s has actually currently closed stores.
Bon-Ton is predicting opening 14 new shops over the next three years.
In its ongoing settlements, Bon-Ton stated it has not yet reached an agreement on mutually appropriate 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 as well as examining liquidation alternatives. The business stated it has currently gotten liquidation quotes for all its stock. Those bids would suffice to cover its outstanding asset-backed loan contracts, excluding any potential insolvency costs.
Previously this month, Moody’s Investors Service downgraded Bon-Ton Stores based on missed interest payment but still within a 30-day grace duration, and said the lowered ranking reflects a high likelihood of default. Moody’s said it believes Bon-Ton’s debt level is unsustainable at existing levels.
The business has considerable leverage, with unadjusted debt/EBITDA expected to surpass 10.9 times by the end of Bon-Ton’s existing fiscal year; and weak coverage, with EBITDA less capital expenditures expected to be insufficient to cover interest expenses, Moody’s said.
For the first three quarters of in 2015, Bon-Ton posted a loss of $135.4 million compared with a loss of $108.1 million for the very same period a year previously. Similar shop sales reduced 6.6% in the duration “due to unseasonably warm weather and the continuation of soft shopping center traffic trends,” the company reported.
However, the outlet store chain hasn’t published a revenue since 2012.
Store Closure List
Shop, Mall, City, State
Herberger’s, Pine Ridge Shopping Center, Chubbuck, Idaho
Carson’s Clearance Center, Aurora Shopping Mall, Aurora, Illinois
Carson’s, Riverside Plaza, Chicago, Illinois
Carson’s, Village Shopping center, Danville, Illinois
Carson’s, Northland Plaza, DeKalb, Illinois
Carson’s Clearance Center, Town Plaza, Morton Grove, Illinois
Bergner’s, Sheridan Town, Peoria, Illinois
Carson’s, Streets of Woodfield, Schaumburg, Illinois
Carson’s, Mounds Mall, Anderson, Indiana
Carson’s, Fair Oaks Shopping Mall, Columbus, Indiana
Carson’s, Concord Mall, Elkhart, Indiana
Carson’s, Circle Centre Mall, Indianapolis, Indiana
Carson’s, Five Points Shopping Mall, Marion, Indiana
Younkers, College Square Shopping Mall, Cedar Falls, Iowa
Younkers, Westdale Mall, Cedar Rapids, Iowa
Elder-Beerman, Kentucky Oaks Shopping Center, Paducah, Kentucky
Elder-Beerman, Adrian Shopping Center, Adrian, Michigan
Carson’s, Orchards Shopping mall, Benton Harbor, Michigan
Herberger’s Clearance Center, Birch Run Station, Maplewood, Minnesota
Bon-Ton, Steeplegate Mall, Concord, New Hampshire
Bon-Ton, Phillipsburg Shopping Mall, Phillipsburg, New Jersey
Bon-Ton, Air Travel Shopping Mall, Queensbury, New York
Bon-Ton, Salmon Run Shopping Center, Watertown, New York
Elder-Beerman, Northtowne Shopping 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 Shopping Mall, Selinsgrove, Pennsylvania
Bon-Ton, Nittany Mall, State College, Pennsylvania
Bon-Ton, Stroud Shopping Center, Stroudsburg, Pennsylvania
Bon-Ton, Trexler Mall, Trexlertown, Pennsylvania
Herberger’s, Cache Valley Shopping Center, Logan, Utah
Younkers, Fox River Shopping Mall, Appleton, Wisconsin
Boston Store, Heritage Town, Beaver Dam, Wisconsin
Elder-Beerman, Eclipse Center, Beloit, Wisconsin
Younkers, Forrest Shopping Center, Fond Du Lac, Wisconsin
Younkers, Lakeshore Edgewater Plaza, Manitowoc, Wisconsin
Younkers, Evergreen Mall, Marinette, Wisconsin
Boston Shop Clearance Center, 5659 S. 27th Street, Milwaukee, Wisconsin
Younkers, Mariner Shopping Mall, Superior, Wisconsin
Younkers, Wausau Center Mall, Wausau, Wisconsin
Bon-Ton, Valley Mall, Hagerstown, Maryland
Younkers, Westwood Shopping Center, Marquette, Michigan
Bon-Ton, St. Lawrence Centre, Massena, New York
Bon-Ton, University Shopping Mall, South Burlington, Vermont
Elder-Beerman, Grand Central Mall, Vienna, West Virginia