Shares of Bon-Ton Stores Inc (BONT.O) rose to their highest level in more than 15 months on Wednesday as the CEO outlined a new strategy to turn around the struggling department store operator.
Brendan Hoffman, who was named chief executive in January, has been trying to streamline operations by trimming costs, controlling inventory levels and improving marketing. He is credited with leading a previous turnaround at retailer Lord & Taylor LLC.
Bon-Ton has been losing money. It operates 272 department stores in the United States, selling apparel, accessories, cosmetics and home furnishings.
Hoffman told participants at a retail industry conference that in the past, Bon-Ton made a mistake by pursuing younger shoppers too aggressively.
"We tried to get too young too quickly ... not younger by years, but younger by decades," he said in a speech, marking the first time he had spoken in such detail about Bon-Ton's turnaround plans.
He said the previous strategy of targeting younger shoppers turned off loyal customers and failed to bring in enough new business.
Hoffman said Bon-Ton is now aiming for a broad assortment of merchandise that appeals to younger and other shoppers, as opposed to focusing only on young customers.
The company will pursue more traditional ways of drawing shoppers, including the use of coupons and paying greater attention to pricing.
"We are going to use coupons. I've learned at Lord & Taylor that customers respond to them. I see Bon-Ton moving in a similar direction," he said.
The company is also seeking to upgrade its merchandise and improve relationships with vendors, he said.
Hoffman also said that Bon-Ton has no capital constraints.
"We have enough capital to get done what needs to get done ... (but) we need to be prudent about how we spend not just capital but all expense dollars," he said.
Bon-Ton shares were up 15.1 percent at $11.16 on Wednesday morning on the Nasdaq. Earlier in the session, the shares rose to $11.26, the highest level since May 2011.
Bon-Ton cut its full-year earnings forecast last month due to higher financing costs and said its second-quarter loss widened on continued off-price sales. However, August comparable sales rose 2.2 percent.
(Reporting by Nivedita Bhattacharjee in Chicago; editing by Matthew Lewis)