Aug 31, 2017
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Department store operator Bon-Ton turns to turnaround advisers

Aug 31, 2017

U.S. department store chain Bon-Ton Stores Inc is hiring advisers to help it turn around its business and slash its debtload, as it struggles to cope with the sector’s downturn, according to people familiar with the matter.


The move underscores the woes of the bricks-and-mortar retail sector, which has been plagued by numerous bankruptcies this year as consumers increasingly move their spending to e-commerce companies such as Amazon.com Inc.

Bon-Ton has tapped advisory firm AlixPartners LLP to provide operational advice on its turnaround efforts, and is also interviewing banks to appoint an advisor to review strategic options including debt restructuring, the sources said this week.

The sources asked not to be identified because the deliberations are confidential. Bon-Ton and AlixPartners did not respond to requests for comment.

Bon-Ton serves smaller communities in 26 states across the U.S. Northeast, Midwest and Great Plains under banners including Bon-Ton, Younkers and Bergner’s.

The York, Pennsylvania-based company has been suffering from years of losses, including a loss of $33.2 million for the quarter that ended July 29.

Bon-Ton’s debt totaled about $850 million as of July 29. A portion of the company’s revolving credit facility expires next year. Bon-Ton’s market capitalization is just $15 million.

The department store operator’s debt is trading well below its face value, indicating investor concerns over its ability to make a full repayment. The company’s $350 million in collateral-backed bonds maturing in 2021 were trading at about 38 cents on the dollar on Thursday, according to Thomson Reuters data.

Bon-Ton has been seeking to cut costs and capture a bigger slice of the online shopping pie. It has also been offering products made in the local communities surrounding its stores in a program called “Close to Home.”

William Tracy, the company’s former chief operating officer, took over as Bon-Ton’s CEO this month. He had previously held management positions at shoe and accessories seller Nine West, New York retailer Fortunoff and Canadian department store operator Hudson’s Bay Company.

Hudson’s Bay is considering going private following pressure from an activist shareholder, Reuters reported last week. Nordstrom Inc, another U.S. department store operator, is also considering being taken private by members of the Nordstrom family.

AlixPartners has advised several retailers in financial distress, including fashion house BCBG Max Azria Global Holdings LLC, which filed for bankruptcy in February

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