Bon-Ton Stores Inc (OTCMKTS:BONT) is set to undergo a series of closures, with at least 40 locations across the country scheduled to be shuttered by the end of next year as part of the Bon-Ton store closures in 2018. The company recently registered another weak quarterly report, showing Bon-Ton’s sales decline. The department store then went on to announce the mass retail stores shutdown it would institute in 2018.
Bon-Ton’s quarterly losses, which led to this recent spate of retail stores closing, are the continuation of a downward trend from which the company cannot seem to break free. The elimination of the 40 stores represents about one-sixth of 260 total locations spread across the U.S.
“This will enable us … moving forward with a more productive store footprint and redirecting capital expenditures toward investments designed to drive sales growth,” Bon-Ton President and CEO William Tracy said in a news release on Thursday, which came alongside the disappointing quarterly results.
Bon-Ton Store Closures in 2018 Based on Declining Sales
The sales decline at Bon-Ton is largely considered the cause of the mass retail stores closing in 2018.
The company has lost money for the past six years, and the most recent report showed that it fell again by $44.9 million. Last year during the same period, the company netted a loss of $31.6 million. Much of this loss of revenue is being spurred on by sales decline, a problem that has caused many brick-and-mortar store closures across the country as e-commerce continues to gobble up more and more of Bon-Ton’s consumers.
In total, through the first three quarters of 2017, the company finds itself down $135.4 million, compared to the $108.1 million it lost during the first nine months of 2016. This continued period of loss has naturally contributed to the company’s 2018 plans.
Bon-Ton had attempted to buck the trend, and had long held out from mass store closures, even with the losses growing. The company said earlier in 2017 that it had only planned to close four to six stores this year, a dramatic departure compared to the 40-plus that will shutter in 2018.
“We’re not the first guys to be doing this,” Tracy said to analysts on Thursday following the quarterly report release. “We’re looking at everything. I just think we’re looking, certainly, at sales performance and profitability of the locations.”
“We’re working with our landlords with the objective of bringing our occupancy costs more in line with the sales and the store performance,” he added. “These negotiations are still ongoing. I don’t have all the answers right now. We are not providing a list of closing locations or the details at this time, but we expect to close at least 40 stores over the next year in 2018.”
The company has yet to release which locations will be getting the ax. The company holds dual headquarters in Milwaukee and York, PA.
“While results in the third quarter fell short of our expectations, we are taking more aggressive actions to fuel improved performance as well as strengthen our financial position,” Tracy said in a statement. “We are executing with a sense of urgency as we work to enhance our merchandise assortment, drive growth in omnichannel, and implement a more focused marketing strategy to improve traffic and customer engagement.”
One of the options that Bon-Ton is looking towards to help it climb out from this hole is to sell its real estate; the company sold its Roseville, Minnesota location for $18.9 million, for instance. The issue is that many of Bon-Ton’s locations are not owned by the company but rather are on lease. The company last reported that it owned less than 10% of its total locations, amounting to 25 stores. With so few available to sell, it’s uncertain how the company will be able to offset the continuing losses through real estate.
Bon-Ton’s Earlier Announcement on Store Closures in 2017 & 2018
While the 40 Bon-Ton store closures in 2018 represent the single most numerous shutdown of the company’s retail stores, these are hardly the first locations to be shuttered by the company.
The Bon-Ton stores closed in 2017, while far fewer than 18, still impacted hundreds of workers across the country. About 55 employees were shed when the company closed its location in Maine Mall. Another roughly 55 employees will also be shed when Bon-Ton closes its Valley Mall location in Maryland next year.
Another location in University Mall in South Burlington, Vermont will shutter early next year when its lease expires, another addition to 2018’s closures.
These closing announcements were made separately from the 40 that were included in the quarterly report.
Retail Store Closures in 2018
Bon-Ton’s situation is not at all unique, however, as many companies in the retail industry are grappling with the changing face of the sector due to the advent and increasing popularity of e-commerce.
The company joins a long list of retail store closures that are set to take place next year. Some have even gone so far as to dub this the “retail apocalypse” due to the massive amount of store closures across the country. Again, much of this is a result of steep sales declines precipitated by the growing strength of online retailers.
Belk, Inc. announced it will be closing two department stores in 2018, one in West Virginia and the other in Georgia. The Belk stores closing in 2018 will result in the loss of 183 full- and part-time jobs.
Sears Holdings Corp (NYSE:SHLD) announced that it will permanently close more of its Sears and Kmart locations next year. The company has already shuttered 358 locations in 2017, making the company one of the hardest hit.
The Kmart stores closing will add 63 more locations to the growing list of location shutdowns for the company. The move is a cost-cutting measure and will likely take place in January 2018. Sears is reported to have lost close to $10.5 billion since 2011.
Target Corporation (NYSE:TGT) is looking to shutter more of its stores next year as well. The company announced that 12 stores across the U.S. will be among those shuttering in 2018.
Overall, the industry outlook is bleak, with next year not exactly getting off to a strong start with so many store closures already announced, with Bon-Ton’s closures being simply another addition to the thinning retail herd.
“Bon-Ton, parent company of Boston Store and Younkers, to close 40 stores in 2018,” Journal Sentinel, November 17, 2017.
“The Bon-Ton Stores, Inc. Reports Third Quarter Fiscal 2017 Results,” Globe Newswire, November 16, 2017.
“Bon-Ton plans to close at least 40 stores next year,” The Morning Call, November 16, 2017.
“Bon-Ton department store at Maine Mall will close in August,” Press Herald, June 15, 2017.
“Bon-Ton to close Valley Mall store in 2018,” Herald Mail-Media, July 20, 2017.
“Bon Ton Stores : Announces Closing of Its Bon-Ton Store in South Burlington, Vermont,” 4-Traders, October 18, 2017.