Bon-Ton Trims Loss in Third Quarter

Retailer was aided by merchandising and marketing initiatives.


The Bon-Ton Stores Inc., showing progress in its turnaround efforts, narrowed losses in the third quarter to $10.1 million, or 55 cents a diluted share, compared with $22 million, or $1.21 a share, for the third quarter of fiscal 2011.

This story first appeared in the November 16, 2012 issue of WWD.  Subscribe Today.

Comparable-store sales increased 1.9 percent in the quarter ended Oct. 27, and the gross margin rate was 36.6 percent compared with 37.4 percent in the third quarter of fiscal 2011, though the rate improved as the quarter progressed. Operating income totaled $10.8 million, compared with operating income of $500,000 in last year’s third quarter.

“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 and chief executive officer.

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Bon-Ton reaffirmed its fiscal 2012 guidance for adjusted earnings before interest, taxes, depreciation and amortization in a range of $160 million to $190 million, and for earnings per share to range from a loss of $1.35 to a 20-cent gain.

Bon-Ton, based in York, Pa., and Milwaukee, operates 273 department stores under the names Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s, Younkers and Parisian. It was not severely impacted by Hurricane Sandy.

Among the retailer’s key strategies are:

• Heavy use of coupons. Hoffman said the company has a “simplified promotional offering using coupons to clearly frame the deal.”

• Playing catch-up on the digital front where the marketing spend is dramatically increasing.

• Rejiggering the balance of traditional and updated merchandise to attract new customers without alienating existing customers.

• “Muscle moves” on the selling floors allocating greater space to “hero categories” such as footwear, seen as leading growth areas.

The company has also been gathering e-mail names from customers inside stores, and generally improving the markdown process with price reductions more aligned with sales performance. In the last quarter, Bon-Ton began opening clearance areas inside underperforming or overspaced stores. There are currently seven. The yellow dot cycle prior to clearance has been reengineered, giving merchants flexibility in the pricing of these goods to better direct markdown dollars.

Hoffman said shoes, fashion apparel, outerwear, accessories and home are expected to be key drivers of fourth-quarter business. On Black Friday, Bon-Ton will stage its biggest Thanksgiving sale ever, with more than 500 doorbusters from midnight until 1 p.m. “Black Friday is like a small month for us,” Hoffman said.