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Bon-Ton expands ship-from-store capabilities as sales losses mount

November 20, 2015 06:00 AM
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The Bon-Ton Stores Inc. will rely heavily on its stores to fulfill online orders heading into 2016.

CEO Kathy Bufano told analysts on the retail chain’s Q3 earnings call that the company next year plans to more than triple the number of stores it uses to ship online, expanding to 200 stores by the end of 2016 from the 60 it uses now. That means nearly three-quarters (74.1%) of Bon-Ton’s 270 stores will serve as mini online fulfillment centers.

Other changes lie ahead.  Bufano told analysts Bon-Ton also is ramping up its buy online, pickup in store program, saying the service will be available in “most of our stores by fall of next year.”

Bon-Ton, No. 181 in the Internet Retailer 2015 Top 500 Guide, has deployed technology that identifies where inventory is located, whether in stores or distribution centers.

“We now have complete system integration of our physical stores in [our] e-commerce network,” Bufano said, according to a transcript from Seeking Alpha. “This enterprise inventory provides visibility to inventory in each store and [distribution center]. Maximizing our customers’ view of our assortment is important when it comes to our localization and Let Us Find It initiative,” referring to a program that lets in-store associates find out of stock items online and have them shipped to shoppers.

In August, Bon-Ton opened an e-commerce fulfillment center in Ohio, which helped it increase fulfillment capacity for online orders to 350,000 items per day from 40,000. Bon-Ton does not break out e-commerce sales, but Bufano said web sales and conversion were up during the quarter, but traffic was down.

“Omnichannel is our No. 1 driver of growth, and we will continue to strategically invest to support this growth,” she said.

Losses are mounting for the retail chain, however.

In its earnings filing, Bon-Ton reported a net loss of $34.0 million during the third quarter, compared with a $11.0 million net loss last year. Through the first nine months of the year, Bon-Ton reported a net loss of $107.6 million, compared with a net loss of $78.7 million last year.

Bufano said Bon-Ton anticipates cutting costs by $35 million next year, though she declined to specify how.

“We are continuing to work through the near-term issues stemming from the sales miss and elevated inventory levels, and are pursuing a number of avenues to drive additional process improvement and further reduced expenses,” she said. “These initiatives will touch upon our areas of our operations with the goal of reducing costs, increasing efficiency and improving output.”

For the third quarter ended Oct. 31, Bon-Ton reported:

  • Net revenue of $623.4 million, down 3.0% from $642.7 million during the same time last year.
  • Comparable-store sales down 2.6%.

For the first nine months of 2015, Bon-Ton reported:

  • Net revenue of $1.790 billion, down 1.3% from $1.814 billion during the same time last year.
  • Comparable-store sales down 1.0%.
 

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