Bon-Ton Narrows Q3 Loss on Improved Sales

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Holiday at Bon-Ton Stores: “Hero” categories include shoes, fashion apparel, outerwear and accessories, management says.

York, PA—Bon-Ton Stores, Inc. reported Thursday that it narrowed its third quarter loss by 54% with improved sales in better-balanced assortments.

For the quarter ended Oct. 27, the operator of Boston Store, Bon-Ton, Bergner’s, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger’s and Younkers posted a new loss of $10.14 million, or 55 cents a share, compared with a net loss of $22.03 million, or $1.21 a share, in the same quarter last year.

Net revenue rose 1.9% to $668.7 million. Comparable store sales rose 1.9%. Gross margin narrowed to 36.6% from 37.4% last year due to increased markdowns and delivery expenses.

Bon-Ton’s results were much better than what analysts expected: a loss of $1.05 a share on sales of $683 million.

“We believe that our third quarter results reflect progress made as a result of initiatives we have been implementing throughout the year, including a better-balanced merchandise assortment, refined marketing efforts, our ‘Customer First’ shopping experience, and expense management,” said Brendan Hoffman, president/ceo. “We were excited to see customers respond favorably to the new fall receipts and to our multi-channel methods of communication which created excitement and traffic in stores and online.”

The company now expects fiscal 2012 results to be between loss per share of $1.35 and earnings per share of 20 cents. Analysts’ consensus expects Bon-Ton to report a loss of 9 cents a share.

Minimal Negative Q4 Impact from Hurricane Sandy

Hoffman told analysts on a conference call that the store was heading into holiday with well balanced assortments.

“‘Hero categories are being highlighted through expanded inventories, square footage and marketing spend,” he noted. “Shoes, fashion apparel, outerwear, accessories and home are expected to be key drivers of our fourth quarter business. We feel we have a strong promotional calendar that will be reinforced by a holiday marketing campaign using all the different channels with continued focus on digital and new media.”

The company has invested in its e-commerce and expanded digital marketing this year. “We recently added a brand index and re-launched our homepage to show multiple rotating images that better reflects the broad offering of our website,” Hoffman added.

Bon-Ton Stores plans to open for Black Friday at midnight as they did last year with more than 500 doorbusters being offered until 1 p.m.

Asked about what affect Hurricane Sandy had on business, Keith Plowman, chief financial officer, told analysts that 37 stores in Pennsylvania and D.C. where closed beginning Monday, Oct. 29 and all reopened by Friday Nov. 2. There was minimum damage to store and a few containers of private brand merchandise had water damage, but that “overall impact to our business for the fourth quarter will be minimal.”