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Bon-Ton Stores declare Chapter 11 bankruptcy

Bon-Ton Eastern Hills

Bon-Ton Stores, saddled with debt and struggling with weak sales as shoppers abandon traditional department stores, said Sunday it filed for Chapter 11 bankruptcy protection and was exploring a sale of all or part of the company.

The chain, which operates 260 stores in 24 states, largely in the Northeast and Midwest, made the filing in the U.S. Bankruptcy Court for Delaware. It had said earlier this year that its holiday sales fell, despite a solid economy in which many retailers did well.

Bon-Ton, which operates stores under its own name as well as the Boston Store, Carson's, Younkers, Herberger's, and Elder-Beerman, had said in a recent regulatory filing that it was in talks with debt holders about restructuring its $1 billion in debt. The company said Sunday that it intends to use the Chapter 11 process to "explore potential strategic alternatives" that may include selling all of the company or some of its assets.

According to its business plan filed with the Securities and Exchange Commission earlier this week, the retail chain said one of its main priorities was to overhaul its private-label products, as it plays catch-up with Kohl's, Macy's and J.C. Penney, all of which have been improving their offerings. Clothes and other items under a store's own labels offer better profit margins.

Last October, Bon-Ton had launched FAO Schwarz shops in about 190 of its stores, two years after the iconic toy chain shut down. But those efforts haven't been enough to turn around its business. Like many department stores, Bon-Ton, with headquarters in York, PA and in Milwaukee, has been hit hard by shoppers' increasing preference for buying online and their shift from buying clothing toward having experiences.

Bon-Ton also has struggled to pay down its debt, which has given it less financial flexibility to invest in its stores and online. The company said in its filing that it also wants to improve its online business, which accounts for about 12 percent of total sales.

It had also said that sales at established locations fell 2.9 percent for the nine-week holiday period that ended Dec. 30, 2017. That was an improvement from a 6.6 percent decline in the third quarter, but the holiday drop made it an outlier in the industry, which was overall helped by a solid economy.

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