Tight control of expenses drove The Bon-Ton Stores Inc. to a loss that was far lower than expected in the third quarter despite a decline in revenues.
This story first appeared in the November 22, 2013 issue of WWD. Subscribe Today.
For the three months ended Nov. 2, the York, Pa.-based department store cut its net loss more than 90 percent to $931,000, or 5 cents a diluted share, versus analysts’ expectations, on average, for a loss of 29 cents. The year-ago loss was $10.1 million, or 55 cents.
Revenues declined 2.4 percent, to $666.6 million from $683.1 million, while net sales pulled back 2.6 percent, to $651.2 million from $668.7 million. Gross margin was flat at 36.6 percent of sales.
Shares jumped 17.8 percent to $14.44 in midday trading on both upbeat comments about recent business conditions and reductions in the stores’ expenses.
Brendan Hoffman, president and chief executive officer, said on a morning conference call that business conditions this month had been “really encouraging. Coincidentally or not, it was right around when the government went back to work and the weather got cold and gas prices continued to fall that I think we started to get credit from the consumer [for] all the changes and the initiatives we put into place.”
He described the improvement in sales of cold-weather merchandise, including sweaters and outerwear, as “dramatic.…It was sizable, and it gave a lift to other areas as well.”
In the quarter, Bon-Ton reduced cost of goods sold 2.7 percent, to $412.9 million, and selling, general and administrative costs 4.3 percent, to $215.2 million.