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McClatchy-Tribune  09/04/2014 12:01 AM ET
Bon-Ton Stores' new CEO Kathryn Bufano poised to help retailer's turnaround, experts say [York Daily Record, Pa. :: ]

Sept. 04--Kathryn Bufano has been getting positive reviews since being tapped to succeed Brendan Hoffman as CEO of Bon-Ton Stores Inc.

One of just a handful of women CEOs at major retailers in the U.S., Bufano joined the company last month from Belk Inc., the Charlotte, N.C., department store chain. At Belk, analysts say, she grew sales, forged strong relationships with suppliers and kept the selection of Southern-focused merchandise fresh.

"We expect new CEO Kathy Bufano to successfully navigate [Bon-Ton] through the next leg of its turnaround," David Glick, an analyst at Buckingham Research Group, wrote in an Aug. 22 research note. "Ms. Bufano has a strong track record as President and Chief Merchant at Belk (very similar regional department store company), and we think her experience is very transferable, particularly her strong relationships with both moderate and better national brands."

Both Belk and Bon-Ton Stores are companies in which the founding family continues to hold a lot of influence. But Belk is larger -- 299 stores and $4 billion in revenue in 2013 compared with Bon-Ton Stores' 272 stores and $2.77 billion in revenue. And unlike Belk, Bon-Ton has two headquarters, in Springettsbury Township and Milwaukee.

Bufano joins Bon-Ton at a time when analysts say the company is rebounding but still faces a number of challenges.

The company eked out a 1.6 percent comparable-store sales gain in the second quarter ending Aug. 2 -- its first gain in five quarters. It posted a $36.2 million loss for the quarter, its sixth money-losing quarter out of the past eight.

Department store chains in general are "being attacked from all sides" as mass marketers like Walmart and online retailers like continue to siphon off shoppers who once did most of their shopping at enclosed shopping malls, said Barbara Kahn, director of the Jay H. Baker Retailing Center at the University of Pennsylvania's Wharton business school.

Bon-Ton faces the additional challenge of having its stores in the Northeast, upper Great Plains and Rust Belt Midwest. Those are all regions which, unlike the Sun Belt, have largely shed residents in recent years.

A regional player, Bon-Ton also competes against national chains like Macy's and Kohl's, which can run the same radio, TV and print ads across the country because all their stores operate under the same name.

Macy's dropped regional nameplates like Burdines in Florida and Rich's in Atlanta and consolidated its stores under the Macy's brand. Bon-Ton, by contrast, operates its stores under seven different names, including Boston Store, Elder-Beerman and Carson's.

"It's a lot of different regional identities to try to maintain," said Dick Seesel, owner of Retailing in Focus, a Mequon, Wis., retail consulting firm, and a former Kohl's executive.

Bufano, on the other hand, sees Bon-Ton's collection of different store names as a strength, not a burden.

"There's a tremendous amount of loyalty and love for the traditional name plates," she said in a telephone interview. "I see this as something that sets us apart from our competitors."

Bufano is also a fan of Bon-Ton's localization strategy. The company varies its merchandise mix varies by region, and sometimes even by store, to reflect customers' tastes.

"It's so important to understand the Chicago customer is very different from the Fargo customer who is different from the Utah customer," Bufano said.

Bufano sees Bon-Ton's growing online business as another plus. Online sales increased 30 percent in the just-concluded second quarter, and the company wants to expand e-commerce in parts of the country where it doesn't have stores.

To further drive sales, the retailer recently launched a program called Let Us Find It! If a shopper is looking for an item a store doesn't carry in her size or color, a store associate will place the order and have it shipped to the customer's home. Bon-Ton is building a new fulfillment center in West Jefferson, Ohio to handle online orders.

Brand names are a large part of Bon-Ton's appeal. Bon-Ton's store at the York Galleria in Springettsbury Township features a new Michael Kors shop with handbags and shoes. The shoe department sells Calvin Klein leather flats, and the cosmetics department features counters devoted to Estee Lauder and Clinique.

Bufano also wants to grow Bon-Ton's private label collection, including its RuffHewn line of edgier, more contemporary fashions for women, men and children. Private label brands "absolutely resonate with our customers," she said.

Bon-Ton's merchandise mix already appeals to Debra Kostiha of West Manchester Township.

"They have high end, and they have a lower end, if that's what you're looking for," said Kostiha, 59, who works in banking.

Growing up in West York, Kostiha rode the bus to visit her grandmother who worked in the dress department at what was then Bon-Ton's flagship store in downtown York. Kostiha later worked at the store, including as one of Santa's elves during the Christmas holidays.

"It's a comfortable place to shop," she said.

Bon Ton Stores Inc.

Headquarters: Springettsbury Township and Milwaukee

CEO: Kathryn Bufano

Stores: 272 in 25 states under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers names.

FY 2013 revenue: $2.77 billion

FY 2013 net loss: $3.6 million

--Bon-Ton names Bufano CEO

--Bon-Ton's Tim Grumbacher gives $1 million in support of Tom Wolf

--Bon-Ton customers raise $57,288 for Soles4Souls


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