Fairborn’s Elder-Beerman distribution center would close under a restructuring plan under consideration by parent company Bon-Ton and its debtholders, according to documents filed with federal regulators.
The Bon-Ton Stores Inc.’s announced closure of stores — and the potential to close additional stores under a reorganization — would “create an opportunity to reduce the number of distributions centers” by closing the Fairborn warehouse, the company said in a filing with the Securities and Exchange Commission.
UPDATE: Bon-Ton files for bankruptcy
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About 96 employees work at the facility, said Mike Gebhart, Fairborn assistant city manager.
The closure, which remains under consideration and is not finalized, would be a setback for Fairborn’s otherwise growing Interstate 675 corridor. That growth, City Manager Rob Anderson said, encourages city leaders that the site at 1340 E. Dayton-Yellow Springs Road would not sit vacant for long.
“I don’t think we’ll have a terrible time getting someone to refill that space,” Anderson said, noting Bon-Ton leases the facility. The property, built in 1991, is owned by STAG Fairborn LLC, a company with a Boston mailing address, according to Greene County property records.
“It’s a hot area of town,” Anderson said.
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Still, the closure “could definitely have a ripple effect and an impact all the way down to small businesses” and families, said Matt Owen, executive director of the Fairborn Area Chamber of Commerce. But he echoed Anderson’s confidence in the ability of the site to attract a new tenant if the site goes vacant.
“There’s no doubt that if that became a future empty site, we would work extremely hard at attracting a new business there,” Owen said.
Still unknown is when a final decision would be made for the Fairborn facility and whether any Elder-Beerman stores in the Dayton-area would be closed. As of Tuesday afternoon, no filings were posted on the state’s WARN website, where mass layoff notices are posted 60 calendar days in advance, as required by federal law.
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Bon-Ton is working with advisers and debtholders to figure out ways to restructure the company’s balance sheet. The company could enter into Chapter 11 bankruptcy as early as Feb. 4, according to the SEC filings. The company missed a $14 million interest payment in December. A previously announced forebearance agreement between the company and noteholders expired Friday.
“Reflecting our planned store closings, we are evaluating a potential distribution center reduction to support our stores,” said Christine Hojnacki, a Bon-Ton spokeswoman, by email. “No decisions have been finalized, and we are committed to pursuing the path that we believe is in the best interests of the company and its stakeholders.”
The Fairborn facility closure could save the company nearly $1.5 million annually, but would come with hefty one-time costs, according to the SEC documents.
MORE: Fairborn to lose 55 jobs in Bon-Ton consolidation
Annual rent for the Fairborn building is $800,000, with occupancy expenses such as utilities tacking on another $600,000 annually. Payroll expenses at the facility cost the company a half-million dollars annually, according to the documents. But, it would cost the company an additional $400,000 to re-route lines to the remaining distribution centers in Rockford, Ill., and Whitehall, Pa., that serve brick and mortar stores.
Those savings estimates do not include one-time costs associated with the closure, such as lease termination expenses and severance pay, according to the documents. Breaking the lease early in Fairborn — scheduled to expire in December 2020 — could cost the company $2.4 million, the documents show. Paying out severance could cost an additional half-million dollars.
The company keeps an additional “omnichannel distribution center” in West Jefferson, near Columbus, and a furniture warehouse in Naperville, Ill.
MORE: Bon-Ton to move jobs from Fairborn distribution facility
Employees at the Fairborn warehouse have faced uncertainty before. In 2014, Bon-Ton announced it would move jobs from Fairborn and from three other similar centers in the Midwest to the new 743,000 square-foot e-commerce distribution center in West Jefferson. At the time, the company said the move would impact only those distribution center employees who are involved in filling direct-to-consumer e-commerce orders.
Bon-Ton did not answer a Dayton Daily News request Tuesday for details about how many people are currently employed at the warehouse. Fairborn officials could not immediately say Tuesday how a loss of those jobs would impact the city’s tax rolls.
The Elder-Beerman department store chain has long been a staple of the Dayton community since an 1883 advertisement in the Dayton Daily Journal announced the establishment of the Boston Dry Goods Store, owned in-part by Thomas Elder. The venture became the Elder & Johnson Company in 1911.
Elder-Beerman was established when Elder & Johnston merged with Dayton’s Beerman Stores in 1962.
After a lengthy bidding war, York, Pa.-based Bon-Ton acquired Elder-Beerman in 2003 for $92.8 million at a time when the local store had just exited bankruptcy. In 2004, Bon-Ton announced the elimination of 311 of 450 jobs at the Elder-Beerman Stores Corp. headquarters in Moraine.
Today, Elder-Beerman has 31 stores, including those at the Dayton Mall, Mall at Fairfield Common and several others at Dayton-area locations. All together, Bon-Ton owns and operates 260 stores under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates. More than 60 of those stores could close under the proposed reorganization, the SEC documents show.