Bon-Ton appears headed towards liquidation

A shopper leaves the Boston Store on April 6 at West Towne Mall, just hours after its parent company, Bon-Ton, said it would close nine Boston Stores in Wisconsin, including those at East Towne and West Towne malls in Madison and in Janesville. Bon-Ton had been trying to sell the company but an auction on Monday drew only interest from liquidators.

Boston Store and Younkers department stores will soon be a thing of the retail past and it will likely mean a big shift for southern Wisconsin’s two largest regional shopping centers.

Bon-Ton Stores, with headquarters in Milwaukee and York, Pennsylvania, announced late Tuesday that it has accepted a bid from liquidators that will lead to the closing of about 260 stores in 24 states. It includes 13 stores in Wisconsin that employ 2,255 people, which includes more than 700 people at the headquarters facility in downtown Milwaukee.

The announcement, while somewhat anticipated after two liquidators were the only bidders in bankruptcy court on Monday, confirms the end of a company with stores founded as early as the 1850s and further alters the ever-changing retail landscape.

The Dayton Daily News in Ohio obtained a letter to employees from Bon-Ton CEO William Tracy on Tuesday that indicated a liquidation would provide the highest offer at a court-supervised auction and that Bon-Ton would ask the court on Wednesday to approve the sale to liquidators. Stores would likely close in 10 to 12 weeks, the newspaper reported.

Bon-Ton confirmed the announcement late Tuesday when it issued a press release saying that a joint venture composed of the holders of the company’s second lien secured notes due 2021 and Great American Group and Tiger Capital Group will acquire the inventory and “certain other assets” of the company. A hearing by the Delaware-based bankruptcy court to approve the sale and wind-down of the company’s operations is scheduled for Wednesday.

“While we are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern, we are committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact of this development on our associates, customers, vendors and the communities we serve,” wrote Tracy. “We are incredibly grateful to all of our associates for their dedicated service to Bon-Ton and to our millions of loyal customers who we have had the pleasure to serve as their hometown store for more than 160 years.”

Bon-Ton, founded in 1898, also operates Bon-Ton, Bergner’s, Carson’s, Elder-Beerman and Herberger’s stores, but Boston Store was founded in 1897 and Younkers in 1856.

Bon-Ton filed for bankruptcy in February and had been hoping to sell to U.S. mall owners Namdar Realty Group and Washington Prime Group to secure a bid that would have kept many of its locations open. That deal, which included a letter of intent issued on April 9, never materialized and will leave over 1 million square feet of retail space in limbo throughout Wisconsin.

In the Madison region, the 140,000-square-foot West Towne Boston Store employs 124 people, the 139,000-square-foot Boston Store at East Towne has 93 employees and the Janesville Boston Store has 74 workers, according to an April 6 filing with the state Department of Workforce Development.

“We are certainly disappointed with the outcome, but this is an opportunity to continue to evolve our properties through transformative anchor redevelopments,” said Stacey Keating, director of public relations and corporate communications for CBL Properties, owner of East Towne, West Towne, Janesville Mall and Brookfield Square. “We have been monitoring this situation closely and we have been working on contingency plans for each center impacted. We have several replacements under advanced negotiation.”

Other Boston Stores in the state operated by Bon-Ton are located at Brookfield Square west of Milwaukee, at Grand Avenue and Southridge malls in Milwaukee, at Mayfair Mall in Wauwatosa, Bayshore Mall in Glendale and at Regency Square in Racine. Bon-Ton also has Younkers stores in Eau Claire, Marshfield and Green Bay.

In January, Bon-Ton announced the closing of 42 other stores, including the Boston Store in Beaver Dam, which opened in Heritage Village Mall in 2009. That announcement also included eight other stores around the state, including the Elder-Beerman in Beloit.

Bon-Ton expects to provide more details about the liquidation plans and going out of business sales at its stores following approval of the winning bid by the bankruptcy court, the company said Tuseday night.

Money raised from the auction will be used to repay what is owed to Bon-Ton’s creditors. Once the company selects a winning bidder and the proposed deal is approved by the U.S. Bankruptcy Court in Wilmington, Delaware, the liquidator can begin selling the inventory, store leases, fixtures and intellectual property.

“They’ve been important to their communities here in the state,” said Jerry O’Brien, executive director of the Kohl’s Center for Retailing Excellence at UW-Madison, said of Bon-Ton stores. “Retail is in a state of disruption right now and the role of the department store has changed.”

Brick-and-mortar retailers have faced growing pressure from internet sales and discount retailers like Walmart and Target. Toys “R” Us, with a store at West Towne and a Babies “R” Us near East Towne, are going out of business, while the 111,000-square-foot Sears store at West Towne has been downsized to 56,000 square feet.

Seritage Growth Properties, which bought the 18-acre Sears property from CBL in 2015, has spent $17 million to redevelop that part of the mall and has added a 31,000-square-foot Dave & Buster’s and a 23,146-square-foot Total Wine & More store, both of which opened last week.

Keating said CBL has had “a long track record of successfully replacing or redeveloping anchor locations.” But O’Brien at UW-Madison believes that if Boston Store closes its stores, it will give malls a chance to redevelop the huge two-story spaces at East Towne and West Towne. He doubts that a single retailer will take over each of the spaces.

“They’re going to want to do something to attract those (lost Boston Store) customers,” O’Brien said.

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Barry Adams covers regional and business news for the Wisconsin State Journal.