Fashion hounds lost in the wilds of Vermont to Montana can take refuge in The Bon-Ton Stores. The company operates some 270 department stores under seven nameplates, including the Bon-Ton, Elder-Beerman, and Carson Pirie Scott banners, in about two dozen states. The stores sell branded (Calvin Klein, Coach, Estée Lauder, and Michael Kors) and private-label women's, children's, and men's clothing; accessories; cosmetics; and home furnishings. Bon-Ton acquired the 142-store Northern Department Store Group (NDSG) from Saks in 2006, doubling its store count. The Bon-Ton Stores was founded in 1898 by the Grumbacher family, and today is controlled by director Tim Grumbacher.
The York, Pennsylvania-based company operates department stores in 24 states: Colorado, Connecticut, Idaho, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Pennsylvania, South Dakota, Vermont, West Virginia, Wisconsin, and Wyoming.
The Bon-Ton Stores comprises seven regional department store chains: Bon-Ton (in the Northeast); Younkers, Carson Pirie Scott, and Elder-Beerman (Midwest); Herberger's (upper Great Plains); Boston Stores (Wisconsin); and Bergner's (Illinois).
Sales and Marketing
The department store operator reported total advertising expenses of $129.3 million in fiscal 2013 (ended January), compared with $145.6 million and $138.8 million in fiscal 2012 and 2011, respectively. The Bon-Ton employs a combination of advertising and sales promotions to build its brand and increase customer visits, spending, and loyalty. The chain's target customers are women between the ages of 25 and 60 with average household incomes of $55,000 to $125,000.
The Bon-Ton Stores rang up $2.9 billion in sales in fiscal 2013 (ended January), a 1% increase versus the prior year. With its store count unchanged from the prior year, the gain resulted from a 0.5% increase in same-store sales and higher online sales. The company credited its ongoing merchandising efforts, including the continued refinement of the mix of national and private brands, for the improvement in same-store sales. The best performing categories were footwear, coats and better sportswear, and cosmetics. Furniture and juniors' apparel were laggards. The modest gain in sales in fiscal 2013 reversed a decline in the previous annual comparison. Indeed, the chain's financial performance has been uneven in recent years. The company's net loss widened from $12.1 million in fiscal 2012 to $21.5 million in 2013.
The department store operator closed the last of its Parisian stores in fiscal 2013, converting three locations to the Carson Pirie Scott banner. To attain steady sales growth, The Bon-Ton Stores implemented changes at seven pilot stores in fall 2011 that included expanded shoe departments, updated merchandise across all products categories, a "rediscover" marketing campaign, and other measures designed to improve the customer experience. Management says the changes at the pilot stores resulted in sales growth that significantly outperformed the company as a whole. As a result, in fiscal 2013 it invested approximately $70 million to expand these growth initiatives to other stores. The chain is also renewing its focus on its small stores in smaller markets. The Bon-Ton also aims to accelerate the growth of its e-commerce business by investing in its technology infrastructure equipment and software. It has launched a self-service kiosk program at selected stores that gives shoppers access to merchandise online that might not be available in the store. Due to the uncertain economic environment going forward, the retailer does not plan on significantly adding to its store count. Instead, management is taking a conservative approach, better suited to today's difficult retail climate, and focusing on remodels and replacement stores, as well as controlling costs and improving liquidity.
Chairman Emeritus Tim Grumbacher is The Bon-Ton's largest shareholder with about 23% of the company's common stock. Investment firm FMR LLC owns about 13%.