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Bon-Ton braces for tough holiday

Andrea Lillo, Staff Staff -- Home Textiles Today, December 2, 2002

The Bon-Ton Stores is maintaining low expectations for the holiday season, faced with a calendar yielding fewer holiday shopping days in a challenging retail environment. Sales are expected to be flat to up a point, said vice chairman and chief merchandising officer Frank Tworecke, during the company's third quarter conference call last month.

Price competition is a chief consideration for the retailer. "What will be the level of discounting that takes place?" asked Jim Baireuther, vice chairman, coo and chief administrative officer, who noted the strategies of primary competitors such as Kohl's and JCPenney's, which are both very aggressive and share many of the same markets as The Bon-Ton. In response, promotions will likely see deeper discounting than last year, Baireuther said. "The price competition out there is significant, and we're reacting accordingly." Baireuther added that November and December account for about 30 percent of the company's annual sales.

For the third quarter, the home area was even with last year's performance, Tworecke said. Sales overall, which decreased on a third-quarter total and comp-store basis by 4.6 percent, were also affected by the decrease in seasonal clearance merchandise, he said, though the company netted improved gross margins.

Currently with 73 department store locations, the Bon-Ton may open one new unit next year, it said. However, over the past several years, the company spent a "disproportionate" amount of capital on opening new stores — nine within 18 months, Baireuther said, six of which are performing reasonably well. Now it has refocused its growth strategy from opening new units to improving the existing ones. "The request for capital in our core stores and corporate structure … is greater than the capital that's available. We have tradeoffs to make." Baireuther also said The Bon-Ton is very open to making an acquisition if the right opportunity arises.

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