Commentary

Bon-Ton's 'Rationalization Program' Will Shutter 40 Stores In 2018

The wobbly bricks-and mortar sector took another hit broadside yesterday as The Bon-Ton Stores announced that its third quarter comparable store sales decreased 6.6% and it will be closing 40 stores in the coming year, although it did not specify where or which ones.

The retailer, with corporate headquarters in York, Penn., and Milwaukee, Wis., operates 260 outlets in 24 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Younkers and Herberger's nameplates. With the exception of the Herberger’s, which was founded in 1928, all of the brands have roots in the 19thcentury.

“We expect to implement a significant store rationalization program and plan to close at least 40 locations through 2018,” William Tracy, Bon-Ton president and CEO, says in the release announcing the results. “This will enable us with moving forward with a more productive store footprint and redirecting capital expenditures toward investments designed to drive sales growth.”

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Eliminating 40 stores represents the shutdown of about a sixth of the parent company’s stores, which include nine furniture galleries and four clearance centers, points out Paul Gores for the Milwaukee Journal Sentinel. Until now, it “has resisted the mass shuttering of locations. Earlier this year, Bon-Ton said it planned to close only four to six stores in 2017,” Gores reports.

Bon-Ton blamed its poor quarterly results — total sales decreased 7.6% to $545.3 million compared to 2016 — on “unseasonably warm weather,” but it really reflects a climate change in the industry. 

Indeed, that’s indicated in the upbeat news in the results: “The Company continued its double-digit sales growth in omnichannel, which reflects sales via the Company's website, mobile site, and its Let Us Find It customer service program. This was driven by increased demand and conversion on both the Company's eCommerce and mobile platforms ….”

No surprise, then, that two new exchange-traded funds that bank on the decline of traditional retailing launched yesterday. The ProShares Decline of the Retail Store ETF [EMTY] “is an inverse ETF, meaning that it’s designed to rise in price when an index of 56 traditional retail stocks declines. Department stores and supermarkets are included in the index, as are purveyors of clothing, electronics and other items,” writes Chris Dieterich for the Wall Street Journal.

“Also launching Thursday is an ETF that specifically targets dispersion between online retail stock prices and declines in bricks-and-mortar ones. The ProShares Long Online/Short Stores ETF, ticker CLIX, goes long on a basket of global online retail stocks including Amazon.com and Alibaba Group,” he continues.

And, Dieterich points out, “no ETF on the market is currently held more by short-sellers, who wager on price declines, than the SPDR S&P Retail ETF, according to Morgan Stanley Wealth Management.”

The impact of the Bon-Ton closures will be felt in smaller markets —and the media that carry their advertising — as is reflected in the news coverage this morning.

“Could Nittany Mall lose another anchor?” reads the hed atop Shawn Annarelli’s coverage for the Centre Daily Times in State College, Penn. Nobody’s talking.

“The Bon-Ton currently operates several stores in the Lehigh Valley, including in the Palmer Park Mall, the Phillipsburg Mall, the Westgate Mall and South Mall,” points out Nick Falsone for lehighvalleylive.com.

Bon-Ton “has just one store in Indianapolis (Carson's), but that store is the only anchor in Circle Centre mall. It also has a Carson’s store in Mounds Mall in Anderson,” points out the Indianapolis Business Journal.

“There are currently Younkers stores in Marquette Township and Marinette, Wis.,” reports Fox TV 6, Upper Michigan’s Source.

“Bon-Ton is one of three anchor stores at the Berkshire Mall. Mall officials told 69 News that the store has not disclosed the future of the local store,” writes Jim Vasil for the 69 News/WFMZ-TV website, which serves eastern Pennsylvania and western New Jersey.

“I'm shocked, actually. I am,” Jennifer Weissberg, a shopper at the Berkshire Mall in Wyomissing tells Vasil. “This kind of makes our mall. It's the store I always go to, and I always park here. I like it. This is where I always go.” 

A lot of people used to go to these places, too. And these.

1 comment about "Bon-Ton's 'Rationalization Program' Will Shutter 40 Stores In 2018".
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  1. Paula Lynn from Who Else Unlimited, November 17, 2017 at 9 a.m.

    There's more to this story about why and there is more than one reason.

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