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Bon-Ton Tops Profit Projections in Fourth Quarter

Despite overall loss in 2012, the department store expects to return to profitability for 2013.

A view of the Bon-Ton store.

The Bon-Ton Stores Inc. beat fourth-quarter earnings projections and, although results weren’t strong enough to pull it into the black for the year, the department store expects to return to profitability for 2013.

Net income dipped 4.8 percent in the fourth quarter to $74.4 million, or $3.71 a diluted share, from $78.2 million, or $4, a year ago. Profits came in 14 cents better than the $3.57 analysts projected. Shares of the company jumped 5 percent to $12.50 Tuesday.

Revenues for the 14 weeks ended Feb. 2 inched up 2.5 percent to $1.03 billion from $1.01 billion as comparable-store sales rose 1 percent. The most-recent quarter benefited from one additional week versus the year-ago period.

Brendan Hoffman, president and chief executive officer, told analysts on a conference call the company had a “more balanced merchandise assortment” and inventories in line with its core customer base.

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Sales in shoes, men’s tailored apparel and furnishings and cosmetics outpaced the company average. Bon-Ton added Coach and Michael Kors to its offerings in November and plans to continue to bring on new vendors this year.

Like most retailers, the company is working hard to figure out the impact of the digital world.

“Our e-commerce business continues to show outsized growth,” Hoffman said. “We have nearly tripled our investment in digital marketing and it is clearly paying dividends, both for e-commerce sales and as a way to drive customers into the stores.”

For the full year, Bon-Ton posted net losses that widened to $21.6 million, or $1.16 a share, from $12.1 million, or 67 cents, a year earlier.

This year, the department store is projecting earnings of 40 cents to $1 a share with a comp sales gain of 2 percent to 3.5 percent.

The company operates in 24 states under seven nameplates, including Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers. On Hoffman’s to-do list is to better tailor assortments to local markets, a strategy that Macy’s Inc. has emphasized as a key component of its recent success.

“As we have consolidated into one central office in Milwaukee, we have lost the appreciation of what makes a customer in Fargo, N.D., different from one in Allentown, Pa.,” Hoffman said. “We need to develop localization as a core competency, both to unleash the potential of our current store base and give us a lane to open new regions that can increase our overall store count.”