The Bon-Ton Stores Inc. just bought itself a little bit of breathing room with a $18.9 million sale-leaseback transaction.
The cash-strapped retailer will use the proceeds from the deal for its Herberger’s location in Roseville, Minn., to repay outstanding debt. The buyer was not disclosed.
After the transaction closes, Bon-Ton will lease the property for an initial term of 20 years, with options to extend the term for four additional successive periods of five years.
William Tracy, president and chief executive officer, said, “The sale-leaseback transaction unlocks additional capital, enabling us to repay debt and enhances our overall liquidity position.”
He added, “We remain focused on executive strategic initiatives to drive enhanced performance.”
According to Bon-Ton, the Herberger’s location recently completed a major remodeling that now includes several larger departments, updated fitting rooms and brighter lighting.
The retailer narrowed its second-quarter loss to $33.2 million from $38.7 million a year ago. But total sales dropped 7 percent to $504.4 million and comparable-store sales declined 6.1 percent in the period ended July 29. Tracy said last month the retailer was working on initiatives to enhance the assortment, marketing and omnichannel strategies, as well as looking at cost reductions to “drive improved performance in the second half.”
Shares of Bon-Ton on Thursday were up 0.02 percent to 47 cents in early Nasdaq trading.
The retailer is on many credit analysts’ watch lists, both because of financial pressures and because of a higher apparel and accessories focus in its merchandise mix compared with competitors. And while some in the industry are optimistic over what they see as signs of a green shoot here and there, most believe that the retail sector will continue to be pressured this year by shifts in consumer shopping habits.