By  on August 28, 2009

Shares of The Bon-Ton Stores Inc. continued to leave the retail sector in the dust Thursday, even though the chain remains highly leveraged and expects losses for the year.

The department store firm’s stock rose 11.5 percent to close at $6.58 Thursday. Over the past two weeks, shares of the York, Pa.-based company have jumped 64.5 percent with two single-day increases of more than 20 percent.

The stock sank to its all-time low of 76 cents in November and is now well ahead of the $3.71 at which it traded a year ago. A total of 473,433 shares traded hands Thursday, nearly five times the average for the past three months. By comparison, more than 6.5 million shares of Macy’s Inc. were traded Thursday in what was a light day for the chain.

Retail shares generally suffered in the financial crisis last year and have rebounded, rising 32.6 percent this year, but Bon-Ton remains an exception that has proven to be particularly volatile.

The S&P Retail Index inched up 0.2 percent, or 0.61 points, Thursday to 370.24 as the Dow Jones Industrial Average rose 0.4 percent, or 37.11 points, to 9,580.63.

Last week, Bon-Ton reported second-quarter losses, but boosted its guidance for the year. The firm, which has more than $1 billion in long-term debt and a myriad of strong competitors, said its losses would weigh in at $2.50 to $3.70 a diluted share, as opposed to the $3.40 to $4.30 previously predicted.

Monica Aggarwal, credit analyst at Fitch Ratings, said the holiday season remains the big question mark for Bon-Ton, noting the company has been cutting costs and controlling inventories to support its profit margins.

“If that relationship holds true for the second half, that would be a good position to be in, but there’s still a lot of uncertainty out there to call it a victory,” Aggarwal said.

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