But Bon-Ton says that their cash situation is good and that the rumors are false:
"We have plenty of cash on hand to get us through the holiday season without any issues," Bon-Ton spokeswoman Mary Kerr said, noting the retailer had $241 million available on a revolving credit line on Sept. 30.
Still, sources said big clothing manufacturers, including Liz Claiborne and Jones Apparel, have tightened terms on shipments to York, Pa.-based Bon-Ton, demanding quicker payment as the uncertainty mounts.
Unless the financial crisis takes an unexpectedly drastic turn, those larger firms are expected to keep merchandise flowing to stores through Christmas. Last week, Bon-Ton reported better-than-expected September sales, although they still declined.
But in recent weeks, some smaller suppliers to Bon-Ton have said credit they need to make deliveries is drying up. So-called "factoring" companies, including the giant commercial lenders CIT and GMAC, have all but stopped extending credit for deliveries during November and December, the suppliers have said.
Update: I was just looking something up, and the very first post on this blog, almost three years ago, was about Bon-Ton buying the Saks stores in the midwest, and (if I do say so myself) I pretty much nailed it:
Saks sold its midwestern department stores, as expected, to Bon-Ton yesterday, for $1.1 billion, reported here by the Chicago Tribune. You have to admire Bon-Ton's courage, if not their brains. If I had a billion lying around, I sure wouldn't spend it on department stores.Another Update: Bon-Ton made a strong statement yesterday refuting the rumors:
This is clearly a dying (if not dead) channel. I suppose there may be a little cash still to be squeezed out of this old cow, but how long will it take Bon-Ton to generate a billion in incremental profits to offset this purchase? They'd do better to put the money in a savings account. Heck, they'd probably do better stuffing it in a mattress.
Bergren added that 281-unit Bon-Ton Stores is “financially strong. When you look at the facts of our balance sheet, we have an appropriate debt structure that was put in place in March ’06. Then only covenant we have on a revolver is $75 million of excess capacity and we currently have about $241 million in excess capacity. We’ve consistently paid down our debt, which is $80 million less than it was last year at this time.”
In addition, he said, Bon-Ton’s inventory is running 10% below last year, “which is appropriate for this environment. And we’re happy that our inventory is very much under control.”
Admittedly, Bon-Ton’s sales are down year-to-date, but Bergren said these sales trends are “right with all of our competitors, too, so it’s not that we are losing market share.”