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Bon-Ton Posts Loss, Names Bergren CEO

NEW YORK — A week after announcing a second-quarter loss, Bon-Ton Stores named a chief executive officer — the former ceo of The Elder-Beerman Stores, a retailer it acquired 10 months ago — while also hinting at possible expansion...

NEW YORK — A week after announcing a second-quarter loss, Bon-Ton Stores named a chief executive officer — the former ceo of The Elder-Beerman Stores, a retailer it acquired 10 months ago — while also hinting at possible expansion plans.

On a conference call Thursday, the retailer detailed the most recent quarter’s results as well as the challenges of integrating Elder-Beerman. On Wednesday, after the market closed, the retailer said current Bon-Ton vice chairman, Byron “Bud” Bergren, was appointed president and ceo of the company. Bergren, who replaced Tim Grumbacher, was named vice chairman of Bon-Ton in November 2003.

Bergren’s most recent position prior to Bon-Ton was president and ceo of Elder-Beerman, the Dayton, Ohio–based retailer Bon-Ton acquired in October 2003 for $92.8 million. He subsequently helped restructure Elder-Beerman’s operations. The combined company operates about 140 stores.

Grumbacher, who retains the position of Bon-Ton chairman, announced his decision to step down as ceo in December 2003. He became ceo in 2000 and has been a member of the board of directors since 1967, and as chairman since 1991.

“Bud has provided significant insight and leadership to identify strategic initiatives as we leverage our operational and merchandising strengths. One of Bud’s immediate responsibilities will be to maximize the synergies that are inherent with the combination of Bon-Ton and Elder-Beerman operations,” Grumbacher said in a Wednesday statement.

On Aug. 19, Bon-Ton first announced a second-quarter loss from a profit a year ago as costs related to a store closure pulled down results. The company also said traffic was weaker-than-expected due to the difficult retail environment, which caused sales volumes to drop. Still, Bon-Ton maintained its full-year earnings-per-share projection of $1.20 to $1.40.

For the three-month period ended July 31, Bon-Ton had a loss of $388,000, or 2 cents a share, including an after-tax charge of 7 cents from store-closing costs. The company had a profit of $858,000, or 6 cents, in the year-earlier period, which included a 4 cent after-tax gain from the sale of a distribution center. Revenues in the quarter were $284.2 million, including $130.2 million from the acquired Elder-Beerman stores. That compared with $153.1 million last year. Comps were down 0.5 percent at Bon-Ton stores and 1.4 percent for Bon-Ton and Elder-Beerman combined.

The quarter’s results reflect “the challenges of realizing a common merchandise assortment in the combined entity,” said James Baireuther, chief administrative officer, in a statement last week. “We are addressing these issues with the right balance between trend and basic items [and] a consistent flow of fresh receipts.”

In the first six months of the year, Bon-Ton widened its loss to $5.9 million, or 38 cents, versus a loss of $2.1 million, or 14 cents, in the same period of 2003. Revenues were $549.3 million, including $255.9 million from the acquired Elder-Beerman stores, compared with $294.2 million last year. Bon-Ton’s same-store sales are down 1.2 percent year to date and combined comps are off 1.9 percent.

In Thursday’s conference call, Bergren said “the opportunity to expand the store-base [of the combined company] is considerable” but said it must first complete the integration of Elder-Beerman.

“We strongly believe that all the hard work now will pay off” later, said Baireuther on the call.

Incidentally, Bon-Ton noted that Bergren is recovering well from heart bypass surgery he underwent in May. An artery blockage was discovered after Bon-Ton requested he have a physical.