NEW YORK — Bon-Ton Stores Inc.’s fourth-quarter profits soared 42.5 percent profit as the retailer posted a tax gain of $2.2 million as well as higher gross margin rates.
The retailer, which just wrapped up its acquisition of the Saks’ northern department store group, also said it was engaging in a new retail strategy aimed at luring in shoppers with better merchandise and an improved shopping environment.
For the quarter ended Jan. 28, Bon-Ton’s net income rose to $38.2 million, or $2.30 a diluted share, from $26.8 million, or $1.65 a share, in the prior period, on sales that inched up 0.3 percent to $464.6 million from $463.3 million. For the year, net income climbed 28.7 percent to $26 million, or $1.57 a share, from $20.2 million, or $1.24, on sales that dropped 0.9 percent to $1.31 billion from $1.32 billion.
Same-store sales for the quarter showed a gain of 0.3 percent, while the gross margin rate climbed 1.3 percentage points, to 37.3 percent.
The tax gain during the quarter relates to a net reduction of income tax valuation allowances, the retailer said in its quarterly statement, created when it acquired Elder-Beerman in October 2003.
Regarding its repositioning, Byron L. Bergren, vice chairman, president and chief executive officer, said on a conference call with analysts that the retailer would “offer a unique and differentiated merchandise assortment, giving our customer a reason to shop with us.”
“Our focus is on apparel, accessories, cosmetics, shoes and home furnishings,” Bergren said. “We also have a significant opportunity to increase the penetration of private brands, to further differentiate our offerings and improve gross margin.”
This story first appeared in the March 10, 2006 issue of WWD. Subscribe Today.