NEW YORK — Don’t expect major changes any time soon.
This story first appeared in the November 26, 2003 issue of WWD. Subscribe Today.
That was the word from Bon-Ton Stores Inc. Tuesday regarding its acquisition of Elder-Beerman Stores Corp., a deal that closed just a month ago.
“For now our efforts are focused on our upcoming holiday season,” said James Baireuther, Bon-Ton’s vice chairman and chief financial officer, on a conference call with analysts. “You will see very few changes in the next couple of months. We expect to intensify the integration process in the spring.”
Bon-Ton added that currently it does not expect to close or sell any Elder-Beerman stores and that it will continue to use the chain’s nameplate. As for shedding jobs, Bon-Ton said it has not yet worked out a timetable for streamlining its workforce, but that it will happen some time next year and the firm will offer “competitive severance packages to affected associates.”
Touching on relationships with suppliers, Bon-Ton said those changes will also be made in 2004 and, as is not unexpected in such a transaction, the firm will have “a combined vendor matrix. Some vendors will be eliminated, some will be expanded.”
The remarks concerning the acquisition were made in conjunction with the regional department store chain’s third-quarter earnings release in which it reported a net loss of $1.7 million, or 11 cents a diluted share, for the three months ended Nov. 1. The loss included a $2.3 million pretax charge for asset impairment related to the acquisition. By comparison, last year the York, Pa.-based company had net income of $330,000, or 2 cents.
Excluding the charge, EPS for the quarter would have translated to a loss of 1 cent.
Net revenues for the period climbed 7.7 percent to $181 million from $168.1 million a year ago, but comparable-store slipped fractionally, or 0.8 percent. Moreover, a 120 basis-point expansion in selling, general and administrative costs offset the sales improvement as well as a 20 basis-point increase in gross margin. Bon-Ton said the results included nine days of operations from Elder-Beerman, excluding comps.
“Although comparable-store sales in the third quarter declined slightly, we were able to manage gross margin and expenses, so the reduction in earnings, excluding the impairment charge, was minimized,” said Baireuther in a statement.
Elder-Beerman operations added $4.5 million to SG&A, noted the company.
Overall, for the nine months of the fiscal year, Bon-Ton narrowed its net loss to $3.8 million, or 25 cents, from $5.6 million, or 37 cents, a year ago. Revenues inched ahead 0.1 percent to $476.4 million and comps dipped 2 percent.
Despite a loss nearly identical to one a year ago, Gottschalks was able to report improved trends in merchandising, expenses and profit margins during the third quarter.
For the three months ended Nov. 1, the Fresno, Calif.-based firm said its net loss plateaued at $2.6 million, or 20 cents a diluted share, versus a year-ago loss of $2.6 million, or 20 cents. Results in the 2002 quarter include a tax credit of $600,000, or 5 cents a diluted share, for the realization of net operating losses from prior years. Excluding this one-time credit, the loss for the quarter was $3.2 million, or 25 cents.
Total revenues for the period fell 5.2 percent to $147.3 million from $155.4 million, as same-store sales declined 2 percent. Gottschalks said the sales decrease was partly because of its closure of eight stores since the year-ago quarter and warm October weather in California and Nevada.
Jim Famalette, president and chief executive, said in a statement, “We improved gross margin 20 basis points through improved flow of merchandise on a seasonal basis and the closure in the last year of several underperforming stores.” In addition, he noted the firm was able to reduce selling, general and administrative expenses 50 basis points.
In the fourth quarter, earnings are expected to improve on flat comps.
Total debt for the quarter decreased $104.5 million, or 41.5 percent, the firm said.