Brainerd's Herberger's store to remain open; Bon-Ton restructures with Chapter 11
Herberger's owners, Bon-Ton Stores Inc., plans to close 47 stores in 17 states, but Brainerd's store is not on that list.
Bon-Ton operates stores carrying names including Herberger's, Younkers, Boston Store and others with 260 stores, including nine furniture galleries and four clearance centers, in 24 states in the northeast, Midwest and upper Great Plains.
"We expect to continue operating in the normal course," Bon-Ton responded in an email to a Dispatch request for more information on the company's restructuring, referring to answers listed on its website. "There are no plans to close additional stores at this time. Decisions regarding our store portfolio will continue to be made based on what makes the best sense for our business just as they always have."
Last week, Bon-Ton filed paperwork detailing its plans and shortage of cash. The company filed for court-supervised restructuring under Chapter 11.
"As part of the comprehensive turnaround plan we announced in November, we are taking the next steps in our efforts to move forward with a more productive store footprint," said Bill Tracy, president and chief executive officer for The Bon-Ton Stores, in a news release at the end of January. "Including other recently announced store closures, we expect to close a total of 47 stores in early 2018. We remain focused on executing our key initiatives to drive improved performance in an effort to strengthen our capital structure to support the business going forward."
Documents exchanged between the company and debtholders put the company's cash balance at no more than $7 million as it heads into what is typically one of the slowest quarters for retailers, according to Bloomberg.
The department-store chain has struggled with debt and slumping sales.
The list of stores to close included just one in Minnesota, the Herberger's Clearance Center in Maplewood. There are nine Wisconsin stores slated to close this year along with eight in Pennsylvania, and seven in Illinois, among others smaller numbers from Maryland to Utah. The company's headquarters are in York, Pa., and Milwaukee, Wis.
"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 its third quarter fiscal results report last fall. "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. We are also focused on cost reductions through the continued rollout of our profit improvement initiatives."
The store closings, Tracy said will enable the company "with moving forward with a more productive store footprint and redirecting capital expenditures toward investments designed to drive sales growth."
Tuesday, the company announced the U.S. Bankruptcy Court for the District of Delaware approved all the company's first day motions related to its voluntary Chapter 11 financial restructuring.
"Collectively, the approvals at a hearing on Feb. 6 will support the Bon-Ton business and enable the company to meet its financial obligations throughout the financial restructuring process," Bon-ton reported in a news release, adding the court approval provides interim access up to $725 million in debtor-in-possession financing from its existing lenders. And open stores and e-commerce along with mobile platforms are operating as normal, the company reported. The company reported it also received authorization to continue to pay wages, provide health and other benefits to employees and pay vendors.
"The court's approvals of our first day motions are an important step forward in our financial restructuring process that will allow the company to continue operating in the normal course and executing on our key initiatives to drive improved performance," Tracy stated in a news release. "We intend to use the additional time and financial flexibility of this court-supervised process to engage with potential investors and our debtholders on a financial restructuring plan as well as evaluate options for our business. ... I want to thank our associates for their ongoing hard work and dedication to our customers as we move through this process."