Analysis: Bon-Ton Stores appears headed toward liquidation
With the only two suitors at the court-supervised auction being liquidators, it looks increasingly likely that Bon-Ton Stores will largely go out of business.
Some locations may survive, especially if the liquidators receive offers from property companies like Namdar Realty Group and Washington Prime Group. Both firms have been working with the troubled department store chain, purportedly to keep stores open across the malls they operate.
A bid for the full Bon-Ton business from real estate players was always unlikely. The rationale behind such a move was not to acquire a viable commercial entity but to stop the loss of a significant tenant. In our view, such a move is like swallowing poison in an attempt to cure a mild disease -- something that is neither sensible not practicable.
In truth, if Bon-Ton was a viable entity then there would have been far more interest in the auction. However, it is a weak player in a weak part of the retail market. Moreover, its disparate retail fascia means that it does not have the power of significant national brand recognition than any potential acquirer could build on.
We believe that the likely path ahead is that assets will be cherry-picked during liquidation. The brand name might be acquired, especially for use online. There may be interest in a handful of better stores -- although how these would work as stand-alone entities or as part of a much smaller group is open to debate.
As such, this more-or-less looks like the end of the road for Bon-Ton. As sad as this is for staff and anyone commercially affected, it is part of the necessary restructuring of retail. Bon-Ton's sales will be picked up by more productive and successful players.
Bon-Ton's place in retail history is secure. Unfortunately, the company did not evolve enough to win a place in retail's future.
Some locations may survive, especially if the liquidators receive offers from property companies like Namdar Realty Group and Washington Prime Group. Both firms have been working with the troubled department store chain, purportedly to keep stores open across the malls they operate.
A bid for the full Bon-Ton business from real estate players was always unlikely. The rationale behind such a move was not to acquire a viable commercial entity but to stop the loss of a significant tenant. In our view, such a move is like swallowing poison in an attempt to cure a mild disease -- something that is neither sensible not practicable.
In truth, if Bon-Ton was a viable entity then there would have been far more interest in the auction. However, it is a weak player in a weak part of the retail market. Moreover, its disparate retail fascia means that it does not have the power of significant national brand recognition than any potential acquirer could build on.
We believe that the likely path ahead is that assets will be cherry-picked during liquidation. The brand name might be acquired, especially for use online. There may be interest in a handful of better stores -- although how these would work as stand-alone entities or as part of a much smaller group is open to debate.
As such, this more-or-less looks like the end of the road for Bon-Ton. As sad as this is for staff and anyone commercially affected, it is part of the necessary restructuring of retail. Bon-Ton's sales will be picked up by more productive and successful players.
Bon-Ton's place in retail history is secure. Unfortunately, the company did not evolve enough to win a place in retail's future.