WILKES-BARRE — As Bon-Ton Stores, saddled with debt and faltering sales, enters the week beside a throng of other retailers under bankruptcy protection, rival chain Boscov’s ended its fiscal year with record sales of $1.2 billion.
According to an Associated Press story, Bon-Ton Stores is seeking a buyer for pieces or all of a department store chain that was founded at the tail end of the 19th century. On Sunday, Bon-Ton filed for Chapter 11 protection in the U.S. Bankruptcy Court for Delaware.
“We are currently engaged in discussions with potential investors and our debt holders on a financial restructuring plan, and the actions we are taking are intended to give us additional time and financial flexibility,” CEO Bill Tracy said in prepared comments released Sunday.
But at Boscov’s, the opposite appears to be true. Jim Boscov, chairman and CEO of the company, said growth is the key word at the Reading-based chain.
“The timing of The Bon-Ton announcement is interesting because we just ended our fiscal year Saturday, and we finished with the best year we’ve ever had,” Boscov said. “We are very close to $1.2 billion in sales.”
Boscov said the company operates 46 stores, opening a store in Erie in October. He said the 47th store will open in Milford, Conn., this October.
“We continue to grow,” Boscov said. “We are committed to making sure we will be your hometown store for the next 104 years as well. We are very fortunate that these opportunities present themselves.”
Bon-Ton, meanwhile, runs 260 stores in 24 states, largely in the Northeast and Midwest. There are two stores in Luzerne County, one in the Wyoming Valley Mall in Wilkes-Barre Township and one in the Midway Shopping Center in Wyoming.
‘Shame’ to lose a competitor
Boscov credited loyalty as the driving force behind Boscov’s success — loyal customers, loyal co-workers and good relationships with vendors. He said the continued success of Boscov’s is predicated on the guidance and values exemplified by his uncle, the late Albert Boscov.
‘We continue to live up to those core principles,” Boscov said.
Regarding The Bon-Ton, Boscov said it’s a shame any time a competitor leaves the marketplace.
“We have always enjoyed that competitive spirit,” Boscov said.
Boscov said mall developers have had to become creative in maintaining high traffic. He said The Marketplace at Steamtown in Scranton is such an example, bringing in other attractions to attract people.
“Despite the changes at Steamtown, we have maintained a very strong store there,” Boscov said. “The mall developers have been very creative, thereby allowing the mall to evolve. We are seeing this happen all over.”
In Wilkes-Barre, Boscov said the South Main Street store continues to show an increase in sales.
“Again, we point to a very loyal customer base and loyal co-workers who have been with us a long time,” he said. “And we continue to be a big part of the community.”
A changing retail world
Bon-Ton isn’t the only retailer feeling the pinch of Americans’ changing buying habits.
While Amazon.com has revolutionized the way people shop, the behavior of Americans had already been diverging radically both in terms of what they buy, and where they buy it. The changes have been so sweeping they’ve left the aisles of many department stores barren of customers even during the crucial days leading up to Christmas.
In early January, Sears Holdings Corp. announced it will be closing more than 100 stores — including two Kmarts in Luzerne County — as the struggling retail chain tries to reverse its fortunes.
The Hoffman Estates, Illinois-based company says the closings include 64 Kmart stores and 39 Sears stores that will be shuttered between early March and early April.
Kmarts at the Laurel Mall in Hazle Township and in Pittston Township are expected to be closed for good by early April.
And in filing for bankruptcy, Bon-Ton joined several dozen other retailers who entered a bankruptcy court over the past year, among them Toys R Us, Payless ShoeSource and Gymboree Corp.
Bon-Ton’s rocky road
But there have been signs for some time that Bon-Ton was in trouble, and they did not ease heading into the most recent holiday season.
Sales at established Bon-Ton stores, a critical gauge of a retailer’s health, slid 2.9 percent in nine-week period before the New Year. Those sales had tumbled 6.6 percent in the prior quarter.
“The harsh reality is that while Bon-Ton’s management put in great effort to make the business sustainable, they were always running up a down escalator,” said Neil Saunders, the managing director of GlobalData Retail.
While the retail and department stores that have sold Americans goods for generations march into bankruptcy court, Amazon for the first time booked more than $1 billion in profits during its most recent quarter.
Bon-Ton, which has dual headquarters in York, Pa. and Milwaukee, Wisc., is now in talks with debt holders about restructuring $1 billion in debt.
It is closing dozens of stores this year in Wisconsin, Pennsylvania, Illinois, Indiana and elsewhere.
Bon-Ton received a commitment of $725 million in debtor-in-possession financing to operate during its restructuring process.