Des Moines Register
03/24/06
Younkers keeps name, image with new owner
Iowa customers should experience no changes
By PATT JOHNSON
REGISTER BUSINESS WRITER
The 132-year-old Younkers tradition will continue.
Younkers' new parent company, Bon-Ton Inc. of York, Pa., plans to leave intact
the Younkers name and the look of the stores. In fact, Bon-Ton is hoping to learn
something from Younkers and its sister stores - Carson Pirie Scott, Bergner's,
Boston Store and Herberger's.
"We're a $1.1billion company buying a $2.2billion company," said Byron "Bud"
Bergren, Bon-Ton chief executive.
Younkers' former parent company, Saks Inc., sold its Carson Pirie Scott division,
which included 47 Younkers stores, 31 Carson's locations, 40 Herberger's stores,
14 Bergner's and 10 Boston Stores. The deal, completed earlier this month,
totaled $1.1billion.
Bon-Ton, which also operates the Elder-Beerman department store chain, is not
totally new to Iowa. Three years ago, it opened a 40,000-square-foot ElderBeerman in Muscatine.
The Saks division buyout increased Bon-Ton's store count to 279 locations in 23
states, which, according to Bon-Ton, makes it the second-largest regional
department store chain behind Dillard's.
Dillard's, which operates a store at Jordan Creek Town Center in West Des
Moines, has 330 stores with annual revenues of $7.7billion, compared with BonTon's $3.3billion.
Bergren said Bon-Ton is not aiming to be No.1 anytime soon. "Our plate is full
right now," he said.
Bergren is anticipating that the integration of Younkers and the other new stores
will be smooth, taking about 18 months. Merging company operations, such as
return and shipping policies and back-room functions, will happen slowly but
without difficulty, he said. "That was one of the attractions of this group of stores,
that it would be a natural fit," he said.
Customers won't notice any changes at Younkers. However, Bon-Ton customers
will see some new merchandise as the company expands Younkers' private
brands, such as Studio Works, Laura Ashley, Relativity and RuffHewn, into its
stores.
Private-brand sales in the former Saks stores accounted for about 15.4percent of
net sales in 2005, which was a little higher than Bon-Ton's private-label sales.
Keeping existing store names is important, and helps retain customer loyalty,
Bergren said.
"For Iowans, it is important they keep the Younkers name because they don't
know anything about Bon-Ton," said Ken Stone, a retail analyst from Ames.
Stone said the Bon-Ton-Younkers marriage has more advantages compared with
when Younkers became part of Saks. Saks was a "whole different grade and
more upscale," he said. "This is a really good fit, actually."
Faithful Younkers shopper Maria Lutrell-Murphy of Des Moines said she would
hate to see Younkers change in any way. "They have very upscale merchandise
with excellent prices, especially their sales," Lutrell-Murphy said.
A major change for Bon-Ton will be moving its merchandising and marketing
offices to Milwaukee, where Saks had operated its headquarters for the Carson's
division. Bergren said the York offices will lose 292 jobs as a result of the
Milwaukee consolidation. He expects about 50 or 60 York workers to move to the
Milwaukee offices and some others to be transferred to different jobs in York.
The Milwaukee office em-ploys about 600 people who are in charge of buying
merchandise for stores and marketing the company.
Bergren said it made sense to keep the Milwaukee offices, where workers had
experience in buying for major markets like Chicago, Milwaukee and some other
large cities.
Bon-Ton is a lot like Younkers and its sister stores.
The company started as a one-room millinery and dry-goods shop in downtown
York in 1898, about 25 years after Younkers was established in downtown Des
Moines.
The Grumbacher family ran the business and still has controlling stock
ownership.
The company opened a second store in 1946 in Hanover, Pa. A year later, it
bought an existing store in Hagerstown, Md., followed by another acquisition 10
years later in Lewistown, Pa.
In 1991, the company, which in the previous two decades had acquired several
small stores and department-store chains, went public, selling shares on the
Nasdaq market under the symbol BONT.
The company boosted its store count in 2003 when it bought the Elder-Beerman
chain, which had 69 stores in the Midwest. The Saks deal further boosts the
company's presence in the Midwest.
New construction and remodeling of all Bon-Ton stores is considered on a yearly
basis, he said. Generally, the company will revamp three to four stores a year
and build two to three stores. There are no immediate plans for the new stores it
bought.
"We invest in our stores when we need to," Bergren said.
Bergren has been in Younkers stores in Wisconsin and plans to visit stores in
Des Moines. A St.Paul, Minn., native, Bergren, 59, worked for the former
Donaldson's department stores and other chains, including Elder-Beerman,
before joining Bon-Ton three years ago.