The Bon-Ton department store chain plans to close its Maine Mall location in South Portland at the end of August, after less than four years of operation.
The store’s parent company, Bon-Ton Stores Inc., released a statement Tuesday announcing the upcoming closure. About 55 employees work at Bon-Ton’s Maine Mall store and will be offered severance, it said.
Bon-Ton moved into the mall in 2013, filling the 120,800-square-foot space that had been vacated by Filene’s in 2006. The decision to close after four years despite the company’s signing a 15-year lease for the space suggests that the store did not perform to expectations.
“Bon-Ton evaluates its store portfolio on an ongoing basis to determine our stores’ long-term viability,” Steve Byers, executive vice president of stores, said in a statement. “Closing a store is never an easy decision and we would like to thank the customers who have shopped with Bon-Ton as well as our store associates for their dedication and friendly customer service to this community.”
It was not immediately clear whether the closure was part of a larger action by the company, which has 261 stores in 25 states in the Northeast and Midwest, under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers names.
In its most recent quarterly report, company President and CEO Kathryn Bufano cited “weak mall traffic trends” as a contributing factor in the company’s poor financial performance. Same-store sales were down 8.8 percent from the same period a year earlier, and total sales of $536.1 million were down 9.3 percent from $591 million in the first quarter of 2016. Its loss per share of stock of $2 to $2.59 is expected for the rest of the fiscal year.
Like many retailers, Bon-Ton is seeing an increase in online sales at the same time its store sales decline. The company said it saw double-digit growth in sales from its website, mobile site and its Let Us Find It customer service program through the first quarter.
The planned closure isn’t likely to affect the bottom line for Maine Mall owner GGP of Chicago because Bon-Ton Stores is obligated to continue making lease payments until January 2029, said Steve Jellinek, vice president of commercial mortgage-backed securities analytical services for Morningstar Credit Ratings LLC.
“If Bon-Ton finds a tenant to sublease, GGP would be (cash) neutral because Bon-Ton would continue paying under its lease,” Jellinek said. “Assuming GGP finds a replacement tenant, GGP would most likely have to negotiate a lease termination with Bon-Ton. It depends on how the current lease is structured.”
He noted that there is one scenario under which the Maine Mall would be denied that money, however.
“If the company (Bon-Ton Stores) were to file for bankruptcy protection, it could reject the lease and stop making payments,” Jellinek said.
Overall, the Maine Mall performed slightly better than expected in 2016, generating $20.7 million in net cash flow, compared with an expected $20.3 million, he said. Still, underwriters of the Maine Mall’s commercial mortgage are keeping an eye on the owners of its other anchor stores.
“Obviously, Sears and J.C. Penney are concerns as well because of their ongoing consolidation,” Jellinek said. “J.C. Penney’s lease (at the Maine Mall) expires in July 2018.”
A GGP spokeswoman declined comment on this story, saying the company doesn’t comment on its tenants.
Bon-Ton has dual headquarters in Milwaukee, Wisconsin, and York, Pennsylvania.
J. Craig Anderson can be contacted at 791-6390 or at:
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