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The Bon-Ton Stores Inc. is making progress in its turnaround.
This story first appeared in the May 24, 2013 issue of WWD. Subscribe Today.
On Thursday, the Milwaukee-based department store chain reported that it narrowed its net loss for the first quarter to $26.6 million, or $1.41 a diluted share, compared with $40.8 million, or $2.23, in the year-ago quarter.
Comparable-store sales increased 1.2 percent, despite bad weather during the quarter. Total sales increased 1 percent to $646.9 million, compared with $640.8 million for the first quarter of fiscal 2012.
Brendan Hoffman, Bon-Ton’s president and chief executive officer, told WWD that Bon-Ton has been working to achieve a better balance of traditional, updated and young merchandise, making headway on e-commerce, and has a stronger clearance strategy. “Those are just a few of the initiatives that are starting to take shape. We have no shortage of opportunities,” he said.
Bon-Ton got a big break on its debt last week when it refinanced bonds, pushing them out at lower rates and giving the company breathing room. The retailer’s debt had been of some concern to vendors. Bon-Ton priced $350 million in second lien senior secured notes due in 2021 at 8 percent and said it would use the funds to pay down higher interest debt coming due in 2014 and 2017.
Regarding women’s ready-to-wear, Hoffman said he was very pleased with the business, which is coming off a soft first quarter in 2012.
He did indicate the business has been erratic, with dresses and plus sizes performing well, while some areas, such as petites, struggling. He said that’s been the trend for a while. Handbags, fine jewelry, men’s furnishings and tailored clothing were also strong. Growing brands at Bon-Ton include Calvin Klein, Ralph Lauren, Michael Kors, Coach and Ruff Hewn.
Hoffman said e-commerce had double-digit sales growth and that there was increased penetration of proprietary credit card sales due to concentrated efforts to drive this business. “Our gross margin rate benefited from a better balanced merchandise mix and a more effective markdown strategy,” he added. Earnings before interest, taxes, depreciation and amortization tripled to more than $15 million.
Among other strategies in the turnaround, Hoffman cited a re-engineering of juniors to broaden its appeal; improvements to the Web site and increased investments in digital marketing, and opening the company’s first stand-alone clearance center in April.