Taking on one of retailing’s most challenging assignments, Kathryn Bufano will join The Bon-Ton Stores Inc. as president and chief executive officer on Aug. 25, succeeding Brendan Hoffman, who previously decided not to renew his three-year contract.
This story first appeared in the August 1, 2014 issue of WWD. Subscribe Today.
Succeeding Bufano as Belk Inc.’s president and chief merchandising officer is David Zant, who steps up from executive vice president and general merchandising manager of men’s, home and kids. He now reports to Tim Belk, chairman and ceo.
On some levels, Bufano’s move comes as a surprise considering she has had a good working relationship with the Belk family and has been instrumental in strengthening the 299-unit chain’s merchandising and reputation for “modern Southern style” and expanding the business to additional locations in the South. The $4 billion business is on solid footing and continues to grow its revenues, though big investments in technology and lower margins pushed net income down last year.
On the other hand, the $2.8 billion Bon-Ton, while also a regional department store chain, is struggling. Bufano will be tested to come up with a new strategy to turn around the operation, though she’s got extensive experience at department stores, holding top merchant jobs at Lord & Taylor, Macy’s, Sears as well as Belk. She’s also held top jobs at Dress Barn and Vanity Shops.
“She has the bandwidth,” said another retail ceo. “She’s very unassuming but she gets results and is tenacious.”
Tim Grumbacher, Bon-Ton’s chairman and chief strategic officer, stated, “We are excited to have an executive with Kathryn’s talents and background. Her years of experience in the department store industry will allow her to refine and drive the strategic growth initiatives we have put in place over the last several years.”
In recent seasons, Bon-Ton has reported weak sales trends and losses. In the first quarter, the loss widened to $31.5 million compared with a net loss of $26.6 million, and total sales decreased 6.1 percent to $607.5 million from $646.9 million a year ago.
Furthering the challenge is the company’s structure, operating under several nameplates in different areas of the country, including Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers, making it harder and costlier to market the businesses. The company has 272 stores — many of which are in small cities with weak economies — in 25 states in the Northeast, Midwest and upper Great Plains. It has dual headquarters, in Milwaukee and in York, Pa.
In addition, the stock is low, closing Thursday at $9.30, up 22 cents or 2.42 percent. In the last 52 weeks, the stock has ranged from a high of $19.25 to a low of $8.76. The announcement of a new ceo was made after the closing bell Thursday.
Hoffman’s agenda has been to pump up private brands, further e-commerce, open clearance centers, localize assortments, personalize e-mails to customers based on their purchases, expand radio frequency identification technology and foster “depth versus breadth” so the company has less breadth of styles and focuses on bestsellers.
Bufano is expected to further some of what Hoffman put in place and develop new turnaround tactics. “This is an exciting opportunity,” she told WWD. “I am originally from the Midwest and I have been a Carson’s customer for a good part of my life.”
Bufano also noted that in retailing, “there are not that many ceo opportunities” and that she considered it “a great accomplishment” to become part of the small club of female retail ceo’s. Membership includes Karen Katz at Neiman Marcus, Mindy Grossman at HSN, Jane Elfers at The Children’s Place, Kay Krill of Ann Inc., and Carol Meyrowitz of TJX Cos.
“Most department store businesses have been around for 100 years or more,” Bufano said. “They may have different nameplates, but it’s been an industry that shows resilience and has been adopting more modern and forward-thinking strategies,” including e-commerce, which she characterized as one opportunity to move Bon-Ton forward.
Bufano credited Hoffman with bringing some momentum to the business and said she hoped to capitalize on it. “There’s opportunity to add value, improve the business and make it worthwhile for shareholders and vendors. Progress has been made. There’s more upside.” She will go through a transition period with Hoffman at Bon-Ton.
“Belk has been terrific to me,” Bufano added. “It’s a great organization with great people. This is a bittersweet departure.”