Hurt by an impairment charge and the highly promotional nature of the holiday season, The Bon-Ton Stores Inc. Wednesday said it swung to a large fourth-quarter loss.

This story first appeared in the March 12, 2009 issue of WWD. Subscribe Today.

For the three months ended Jan. 31, the loss was $87.7 million, or $5.22 a diluted share, against income of $75.2 million, or $4.43, in the year-ago quarter. Excluding noncash impairment charges to reduce the reported value of long-lived and intangible assets and a provision for a valuation allowance for deterred tax assets, the firm would have reported net income of $2.17 a share in the quarter, 5 cents above the analyst consensus estimate.

The finish ahead of expectations helped to drive Bon-Ton shares up 20 cents, or 17.7 percent, to close at $1.33 Wednesday, the third best performance on a percentage basis of all stocks tracked by WWD.

Total revenues were down 9.5 percent to $1.06 billion in the quarter from $1.17 billion. Revenues include a 9.4 percent decrease in sales to $1.03 billion from $1.14 billion. Comparable-store sales in the quarter declined 9.7 percent. “Consistent with the retail industry in general, the highly promotional climate and soft holiday season led to higher net markdowns and a decline in our gross margin rate as compared with the same period last year,” said Bud Bergren, president and chief executive officer.

Gross margin eroded to 34.7 percent of sales from 37.5 percent in the year-ago quarter.

He added that because the retailer expects to continue to feel the effects of a weak economy in 2009, it is “projecting a decline in comparable-stores sales and, accordingly, we are planning a reduction in inventory receipts until we see signs of improving consumer sentiment.”

The retailer said in January that it was implementing cost-savings initiatives affecting operating expenses, capital expenditures and inventory levels that it projected would produce at least $70 million in annual savings. A one-time expense, including severance, of about $2 million is anticipated for these reductions, Bergren said.

For the year, the loss was $169.9 million, or $10.12 a diluted share, against income of $11.6 million, or 68 cents, in 2007. Total revenues fell 7 percent to $3.23 billion from $3.47 billion. Revenues include a 7 percent decline in sales to $3.13 billion from $3.37 billion.