Reports: Bon-Ton Stores Inc. preparing for bankruptcy as soon as this weekend

Struggling retailer Bon-Ton Stores Inc. could file for bankruptcy protection as soon as this weekend, according to reports by national news services.

Reports by Reuters and Bloomberg News cited unidentified sources familiar with the matter in the reports.

Christine Hojnacki, a spokeswoman for Bon-Ton, which is the parent company of Boston Store, Younkers and other department stores in the United States, said Friday the company has no comment.

Bon-Ton, which hasn’t been profitable since 2010, on Wednesday announced it is closing 42 stores this year, including nine in Wisconsin, as it tries to turn around financially.

On Monday, Bon-Ton disclosed it was in talks with a group of creditors about a restructuring plan that would allow it to keep operating either in or out of bankruptcy.

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The Bloomberg report Friday said Bon-Ton is planning to file for bankruptcy protection after failing to find a last-minute buyer. The Reuters report said the company had secured a loan that would allow it to file for bankruptcy as early as Sunday.

"It's possible they will file successfully for reorganization, but that's not a guarantee they will survive," said retail industry consultant Anne Brouwer, senior partner at McMillanDoolittle in Chicago.

Bon-Ton is burdened with about $1.1 billion in debt. With sales slumping in a tough environment for retailers — especially for department stores — Bon-Ton recently missed a $14 million interest payment. Talk of the company filing for Chapter 11 bankruptcy protection has heated up ever since then.

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Reuters reported the loan would help Bon-Ton continue to operate in bankruptcy and carry it through a potential sale.

Bon-Ton has been hit hard by the migration of shoppers to online merchants and a trend of fewer visitors going to malls. Bon-Ton stores are in about two dozen shopping centers in Wisconsin.

Boston Store is an anchor tenant in five retail shopping centers in the metro Milwaukee area: Bayshore Town Center, Brookfield Square, Grand Avenue, Mayfair and Southridge. None of those stores was on this week’s list of locations slated for closing.

"The biggest thing I see for them is this issue of — whatever happens in terms of financial restructuring — how do they attract a younger customer to the store that is probably shopping elsewhere these days," said retail consultant Dick Seesel, owner of Retailing in Focus in Mequon.

Brouwer said, "One side of the equation is how do you get your costs down and stop bleeding financially."

"The bigger, long-term challenge for them is what's their reason to exist," Brouwer said. "Do they have a business model, a positioning in the marketplace and in consumers' minds, that they can be meaningful? What is their point of differentiation? Why should consumers consider them over the range of competition. I don't see an answer to that yet. Maybe they're working on one."

Bon-Ton lost $63.4 million in 2016 and was on its way to posting an unprofitable fiscal 2017. Its financial results for fiscal 2017 haven't been posted, but through the first three quarters of the year the company lost $135.4 million.

Bon-Ton, which has had four chief executive officers since 2012, recently put together a plan to turn around the company's fortunes. The plan focuses on closing underperforming stores, providing more sought-after merchandise, improving its marketing and increasing online-related sales by 50% in the next two years.

The stock price of Bon-Ton closed at an all-time low of 15 cents per share on Friday. A year earlier, a share of Bon-Ton stock cost $1.18. The company’s stock price was $30 per share in 2006 when Bon-Ton came into the Milwaukee area market by buying Boston Store and other retail stores from Saks Inc.