SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

2801 East Market Street

York, Pennsylvania 17402

(717) 757-7660

www.bonton.com

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

     The Company has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months and has been subject to such filing requirements for the past 90 days.

     The Company is an accelerated filer (as defined in Rule 12b-2 of the Act).

     Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is contained in the Company’s proxy statement incorporated by reference in Part III of this Form 10-K.

     As of the last business day of the Company’s most recently completed second fiscal quarter, the aggregate market value of the voting stock held by non-affiliates of the Company was approximately $128.2 million, based upon the closing price of $13.81 per share.*

     As of April 8, 2005, there were 13,666,932 shares of Common Stock, $.01 par value, and 2,951,490 shares of Class A Common Stock, $.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statement for the 2005 Annual Meeting of Shareholders (the “Proxy Statement”) are incorporated by reference in Part III to the extent described in Part III.

          References to a year in this Form 10-K refer to The Bon-Ton Stores, Inc. fiscal year, which is the 52 or 53 week period ending on the Saturday nearer January 31 of the following calendar year (e.g., a reference to fiscal 2004 is a reference to the fiscal year ended January 29, 2005).

PART I

Item 1.     Business.

General

          The Bon-Ton Stores, Inc. (the “Company”) is a Pennsylvania corporation. The Company and its predecessors have been operating department stores since 1898.

          As of January 29, 2005, the Company operated 139 department stores and two furniture stores in sixteen states from the Northeast to the Midwest under the names “Bon-Ton” and “Elder-Beerman.” The stores carry a broad assortment of quality, brand-name fashion apparel and accessories for women, men and children, cosmetics, furnishings and other goods.

          The Company’s executive offices are located at 2801 East Market Street, York, Pennsylvania.

Merchandising

          Our stores offer opening price point, moderate and better merchandise in apparel, home furnishings, cosmetics, accessories, shoes and other categories. Sales of apparel constituted 54.5%, 56.5% and 59.7% of net sales for fiscal 2004, 2003 and 2002, respectively. Elder-Beerman store sales from October 24, 2003 (the acquisition date) through January 31, 2004 are included in fiscal 2003, while fiscal 2002 does not include Elder-Beerman store sales. The following table illustrates net sales by product category for fiscal 2004, 2003 and 2002:

          We carry a number of highly recognized brand names, including Calvin Klein, Estee Lauder, Liz Claiborne, Nautica, Nine West, Ralph Lauren, Van Heusen, Sag Harbor, OshKosh, Easy Spirit, Pfaltzgraff and Tommy Hilfiger. Within these brands, we select collections which balance fashion, price and selection.

          We depend on our relationships with our key vendors to secure branded merchandise. If we lose the support of these vendors, it could have a material adverse effect on the Company.

          Complementing branded merchandise, our private brand merchandise provides fashion at competitive pricing under names such as Andrea Viccaro, Jenny Buchanan, Madison & Max and Statements.bt. We view this private brand merchandise as a strategic addition to our strong array of highly recognized, quality national brands and as an opportunity to increase brand exclusiveness,

          Our business, like that of most retailers, is subject to seasonal fluctuations, with the major portion of sales and income realized during the latter half of each year, which includes the back-to-school and holiday seasons.

Marketing

          The Company’s primary target customers are women between the ages of thirty-five and sixty-five with annual household incomes between $35,000 and $100,000. Advertising messages are focused on communicating the Company’s merchandise offerings and the strong quality/ value relationship in those offerings. The Company employs advertising programs that include print and broadcast as well as creative in-store signing, displays and special promotions. Newspaper inserts are used on a regular cadence. The Company also uses television in markets where it is productive and cost efficient. The Company uses a database targeting system facilitating focused direct mail to our preferred charge customers who are most likely to respond to a merchandise offering.

Customer Credit

          Our customers may pay for their purchases with Bon-Ton and Elder-Beerman proprietary credit cards; third party credit cards such as Visa, Mastercard and Discover; cash or check.

          Our proprietary credit card holders generally constitute our most loyal and active customers. During fiscal 2004, the average dollar amount for proprietary credit card purchases substantially exceeded the average dollar amount for cash purchases. We believe our credit cards are a particularly productive tool for customer segmentation and target marketing.

          The following table summarizes the percentage of total fiscal year sales generated by payment type (sales made at Elder-Beerman stores prior to the acquisition on October 24, 2003 are excluded):

Competition

          We face competition for customers from traditional department stores, mass merchandisers, specialty stores, off-price and discount stores, and, to a lesser extent, catalogue and internet retailers. Many of our competitors have substantially greater financial and other resources than the Company, and some of our competitors have greater leverage with vendors, which may allow such competitors to obtain merchandise more easily or on better terms.

          We believe we compare favorably with our competitors with respect to quality, assortment of merchandise, prices for comparable quality merchandise, customer service and store environment. We also believe our knowledge of secondary markets, developed over many years of operation, gives us a competitive advantage as we focus on secondary markets as our primary area of operation.

          As of January 29, 2005, we had approximately 12,600 full-time and part-time associates. We employ additional part-time associates during peak periods. None of our associates are represented by a labor union. We believe that our relationship with our associates is good.

Available Information

          Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available without charge on our website, www.bonton.com, as soon as reasonably practicable after they are filed electronically with the SEC.

          We also make available on our website, free of charge, the following documents:

Executive Officers

          The executive officers of the Company, their ages (as of April 8, 2005) and their positions, are as follows:

          Mr. Bergren was named President and Chief Executive Officer in August 2004. Mr. Bergren joined the Company in November 2003 as Vice Chairman and served as President and Chief Executive Officer of The Elder-Beerman Stores Corp. from February 2002 through August 2004. He served as Chairman of the Southern Division of Belk, Inc. from 1999 to February 2002, as Partner of the Florida Division of Belk, Inc. from 1992 to 1999, and in senior executive positions at Belk Stores from 1985 to 1992.

          Mr. Zant joined the Company as Vice Chairman and Chief Merchandising Officer in January 2005. From July 2002 to December 2004, he was Executive Vice President — General Merchan-

          Mr. Zamberlan was appointed Executive Vice President — Stores in November 2004. He has served as Executive Vice President — Stores for The Elder-Beerman Stores Corp. for more than five years.

          Mr. Clouser was appointed Senior Vice President — Human Resources in February 2005. He served as Vice President — Employment and Training from April 2004 to February 2005, and for more than four years prior to that time, was Senior Vice President — Human Resources at The Elder-Beerman Stores Corp.

          Ms. Derry was appointed Senior Vice President — General Merchandise Manager in February 2001. For more than two years prior to that time, Ms. Derry was a Divisional Merchandise Manager for Bon-Ton.

          Mr. Farrell was appointed Senior Vice President — Stores in June 2000. Prior to that time, Mr. Farrell was Vice President — Stores for Bon-Ton.

          Mr. Geisenberger was appointed Senior Vice President — Marketing and Sales Promotion in May 2004. From July 2000 to May 2004, he was Senior Vice President — General Merchandise Manager. Prior to that time, Mr. Geisenberger was a Divisional Merchandise Manager for Bon-Ton.

          Mr. Gleason was appointed Senior Vice President — Credit in May 2004. For more than four years prior to that time, he was Vice President — Credit.

          Mr. Lance was named Senior Vice President — Chief Information Officer in November 2003. For more than five years prior to that time, he served as Senior Vice President — Information Systems at The Elder-Beerman Stores Corp.

          Mr. Plowman was appointed Senior Vice President — Finance in September 2001 and, in June 2003, was named Principal Accounting Officer. From May 1999 to September 2001, he was Vice President — Controller, and prior to that time he was Divisional Vice President — Controller, of the Company.

          Ms. Rivera was named Senior Vice President — General Merchandise Manager in February 2004. From March 2003 to February 2004, she was Vice President — Merchandising, and for more than five years prior to that time, Ms. Rivera was a Divisional Merchandise Manager for Bon-Ton.

          Mr. Sears was named Senior Vice President — General Merchandise Manager in March 2005. From December 1999 to March 2005, he was Senior Vice President — General Merchandise Manager for the Proffitts Division of Saks Incorporated.

          Messrs. Grumbacher, Baireuther, McIntyre and Sattler have been executive officers of the Company for more than five years.

Cautionary Statements Relating to Forward-Looking Information and Risk Factors

          The Company has made, in this Form 10-K, forward-looking statements relating to developments, results, conditions or other events the Company expects or anticipates will occur. These statements may relate to revenues, earnings, store openings, market conditions and the competitive environment. The words “believe,” “may,” “will,” “estimate,” “intend,” “expect,” “anticipate” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Forward-looking statements are based on management’s then-current views and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Risks Related to Our Business, Finances and Operations

          On October 24, 2003, we acquired all of the issued and outstanding capital stock of The Elder-Beerman Stores Corp. (“Elder-Beerman”). Failure to achieve additional synergies related to the acquisition of Elder-Beerman may cause significant operating inefficiencies and could adversely affect our profitability and the price of our stock.

          It is difficult to predict what merchandise consumers will want. A substantial part of our business is dependent on our ability to make correct trend decisions for a wide variety of goods and services. Failure to accurately predict constantly changing consumer tastes, preferences, spending patterns and other lifestyle decisions could adversely affect short-term results and long-term relationships with our customers.

          Our merchants focus on inventory levels and balance these levels with plans and trends. If our inventories become too large, we may have to “mark down,” or decrease the sales price of, significant amounts of our inventory, which could reduce our revenues.

          Our performance depends on appropriate management of our expense structure, including our selling, general and administrative costs. If we fail to meet our expense budget or to appropriately reduce expenses during a weak sales season, our results of operations could be adversely affected.

          As of January 29, 2005, we had total debt of $179.1 million. We will have significant debt service obligations, consisting of required cash payments of principal and interest, for the foreseeable future. Our ability to service our indebtedness will depend upon, among other things, our ability to replenish inventory, generate sales and maintain our stores. In the event we are unable to meet our debt service obligations or in the event we default in some other manner under our credit agreements, the lenders thereunder could elect to declare all borrowings outstanding, together with accrued and unpaid interest and other fees, immediately due and payable.

          Our primary credit agreement contains a number of covenants that limit the discretion of our management with respect to certain business matters. The credit facility agreement, among other things, restricts our ability to:

          The occurrence of an event of default under the agreements governing our debt would permit acceleration of the related debt, which could harm our business, profitability and growth prospects.

          Our operating challenges and management responsibilities have increased as we have grown and will continue to increase if we grow as planned. Successful future growth will require that we continue to expand and improve our internal systems and our operations. Our business plan depends on our ability to operate new retail stores and to convert, where applicable, the formats of existing stores on a profitable basis. In addition, we will need to identify, hire and retain a sufficient number of qualified personnel to work in our new stores. These objectives have created and may continue to create additional pressure on our staff and on our operating systems. We cannot assure you that our business plan will be successful, or that we will achieve our objectives as quickly or as effectively as we hope.

          Sales of merchandise and services are facilitated by our credit card operations. These credit card operations also generate additional revenue from fees related to extending credit. Our ability to extend credit to our customers depends on many factors, including compliance with federal and state laws which may change from time to time. In addition, changes in credit card use, payment patterns and default rates may result from a variety of economic, legal, social and other factors that we cannot control or predict with certainty. Changes that adversely affect our ability to extend credit and collect payments could negatively affect our results of operations and financial condition.

          The products we sell are sourced from a wide variety of domestic and international vendors. Our ability to find qualified vendors and source products in a timely and cost-effective manner, including obtaining vendor allowances in support of the Company’s advertising and

          We believe that our success depends to a significant degree upon the continued contributions of our executive officers and other key personnel, both individually and as a group. Our future performance will be substantially dependent on our ability to retain or replace such key personnel and the inability to retain or replace such personnel could prevent us from executing our business strategy.

          We spend extensively on advertising and marketing. Our business depends on effective marketing to generate high customer traffic in our stores. If our advertising and marketing efforts are not effective, our results could be negatively affected.

          If we are unable to successfully complete acquisitions or to effectively integrate acquired businesses, our ability to grow our business or to operate our business effectively could be reduced, and our financial condition and operating results could suffer. The consummation and integration of acquisitions involve many risks, including the risk of:

          Our failure to effectively consummate acquisitions and integrate newly acquired businesses could have a material adverse effect on our financial condition and results of operations.

          Tim Grumbacher, trusts for the benefit of members of Mr. Grumbacher’s family and The Grumbacher Family Foundation, collectively, currently beneficially own shares of our outstanding common stock (which is entitled to one vote per share) and shares of our Class A common stock (which is entitled to ten votes per share) representing approximately 64% of the votes eligible to be cast by shareholders in the election of directors and generally. Accordingly, Mr. Grumbacher has the power to control all matters requiring the approval of our shareholders, including the election

Risks Related to our Industry

          We compete primarily with other department stores, many of which are units of national or regional chains that have significant financial and marketing resources. The principal competitive factors in our business are price, quality, selection of merchandise, reputation, store location, advertising and customer service. We cannot assure you that we will be able to compete successfully against existing or future competitors. Our expansion into new markets served by our competitors and the entry of new competitors into, or expansion of existing competitors in, our markets could have a material adverse effect on our business, financial condition and results of operations.

          We rely on in-store sales for a substantial majority of our revenues. Internet retailing is extremely competitive and could result in fewer sales and lower margins. A significant shift in customer buying patterns from in-store purchases to purchases via the Internet could have a material adverse effect on our business and results of operations.

          Our stores experience seasonal fluctuations in net sales and consequently in operating income, with peak sales occurring during the back-to-school and holiday seasons. In addition, extreme or unseasonable weather can affect our sales. Any decrease in net sales or margins during our peak selling periods, decrease in the availability of working capital needed in the months before these periods or reduction in vendor allowances could have a material adverse effect on our business, financial condition and results of operations. We usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant amount of inventory, especially before the peak selling periods. If we are not successful in selling our inventory, especially during our peak selling periods, we may be forced to rely on markdowns or promotional sales to dispose of the inventory or we may not be able to sell the inventory at all, which could have a material adverse effect on our business, financial condition and results of operations.

          General economic factors that are beyond our control influence our forecasts and directly affect performance. These factors include interest rates, recession, inflation, deflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends and other matters that can adversely influence consumer confidence and spending and, in turn, our sales. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency and magnitude.

          The market price of our common stock has been and may continue to be volatile and may be significantly affected by:

          In addition, the stock market has, recently and from time to time, experienced significant price and volume fluctuations that have adversely affected the market prices of securities of companies without regard to their operating performances.

          Certain provisions of our articles of incorporation and by-laws, as well as provisions of the Pennsylvania Business Corporation Law, could have the effect of deterring takeovers or delaying or preventing changes in control or management of the Company that our shareholders consider favorable and could depress the market value of our common stock.

          Subchapter F of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, which is applicable to us, may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the shares held by shareholders. In general, Subchapter F of Chapter 25 of the Pennsylvania Business Corporation Law delays for five years and imposes conditions upon “business combinations” between an “interested shareholder” and us, unless prior approval by our board of directors is given. The term “business combination” is defined broadly to include various merger, consolidation, division, exchange or sale transactions, including transactions using our assets for purchase price amortization or refinancing purposes. An “interested shareholder,” in general, would be a beneficial owner of shares entitling that person to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors.

          Because a significant portion of our business is apparel and subject to weather conditions in our markets, our operating results may be unexpectedly and adversely affected by inclement weather. Frequent or unusually heavy snow, ice or rain storms or extended periods of unseasonable temperatures in our markets could adversely affect our performance.

          Our performance is dependent on attracting and retaining a large and growing number of quality associates. Many of those associates are in entry level or part time positions with historically high rates of turnover. Our ability to meet our labor needs while controlling costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. Changes that adversely impact our ability to attract and retain quality associates could adversely affect our performance.

          Various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change from time to time. Additionally, we are regularly involved in various litigation matters that arise in the ordinary course of business. Litigation or regulatory developments could adversely affect our business operations and financial performance.

          Other factors that could cause actual results to differ materially from those predicted and that may adversely affect our ability to grow include: changes in the availability or cost of capital, the availability of suitable new store locations on acceptable terms, shifts in seasonality of shopping patterns, work interruptions, the effect of excess retail capacity in our markets and material acquisitions or dispositions.

          The Company does not undertake to revise any forward-looking statement to reflect events or circumstances that occur after the date the statement is made.

Item 2.     Properties.

          The properties of the Company consist primarily of stores and related facilities, including distribution centers. The Company also leases other properties, including corporate office space in York, Pennsylvania. As of January 29, 2005, the Company operated 141 stores in sixteen states in the Northeast and Midwest, comprising a total of approximately 11,900,000 square feet. Of such stores, ten were owned, 129 were leased and two stores were operated under arrangements where the Company owned the building and leased the land. Pursuant to various leases or shopping center agreements, the Company is obligated to operate certain stores for periods of up to twenty years. Some of these agreements require that the stores be operated under a particular name. Most leases require the Company pay real estate taxes, maintenance and other costs; some also require additional payments based on percentages of sales. Certain of the Company’s real estate leases have terms that extend for a significant number of years and provide for rental rates that increase or decrease over time.

Item 3.     Legal Proceedings.

          We are a party to legal proceedings and claims which arise during the ordinary course of business. We do not expect the ultimate outcome of any of such litigation and claims will have a material adverse effect on our financial position, results of operations or liquidity.

          None.

PART II

          The Company’s common stock is traded on the Nasdaq Stock Market (symbol: BONT). There is no established public trading market for the Class A common stock. The Class A common stock is convertible on a share-for-share basis into common stock at the option of the holder. The following table sets forth the high and low sales price of the common stock for the periods indicated as furnished by Nasdaq:

          On April 8, 2005, there were approximately 229 shareholders of record of common stock and five shareholders of record of Class A common stock.