Slow sales have continued to hamper the majority of department stores in 2016, and it appears Bon-Ton is as vulnerable to these woes as any other retailer. Q2 comparable store sales decreased 2.0% while total sales dropped 2.4%, with net losses reaching $38.7 million.
While holding a lower profile than peers such as Macy’s, Kohl’s, JC Penney and Nordstrom, Bon-Ton’s struggles are just as real. And like many of its peers, Bon-Ton could likely afford to close a few stores that aren’t performing up to par. A report from Green Street Advisors recommended Bon-Ton close 40 stores — 15% of its remaining locations — in order to return to the productivity levels it enjoyed in 2006.
“We made progress on a number of our strategic initiatives during the second quarter, although the soft mall traffic trends continued to negatively impact our business,” said Kathryn Bufano, President and CEO of Bon-Ton. “Importantly, we delivered sales gains in our key growth categories and brands, and drove accelerated double digit growth in our omnichannel business, with a triple digit increase on our mobile site. In addition, we maintained careful inventory controls, as we reduced inventory by 6% with fewer markdowns.”
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The inventory reduction is an action more department stores and traditional brands are likely going to have to take as sales and store traffic continues to declines. With less foot traffic, items will be on the sales floor longer, leading the retailer to mark the product down. Kohl’s attributed its increasing gross margins and resulting 7.7% net income boost in Q2 to tighter inventory control within its stores, so there is precedent for such moves to show positive impact for Bon-Ton going ahead.
The retailer revealed that sales increases were achieved in categories including Activewear, Big & Tall, Denim, Young Men’s, Young Contemporary Plus, Women’s Better Handbags, Hard Home and Furniture. If anything, this shows that the company is doing well enough in certain items that it can focus its business and any promotional strategies around them.
Other retailers can also learn to play to their strengths. As traditional brands seek to differentiate themselves, it might make more sense for them to focus more on the flagship items they’re selling as opposed to the overall brand itself.
