The Bon-Ton Stores Inc., hit by refinancing and streamlining costs and women’s apparel issues, widened its loss for the second quarter and lowered the full-year forecast.
Bon-Ton said it could see anywhere from a loss of $1.35 to a gain of 20 cents a diluted share for the year, from previously forecasting anywhere from a loss of 95 cents a share to a profit of 50 cents. Comparable-store sales are seen at flat to up 1.25 percent.
However, Bon-Ton’s president and chief executive officer, Brendan Hoffman, cast a positive outlook Thursday by citing merchandise, marketing and online advancements, and the regional department store’s first comp-store gain since the fourth quarter of 2010. “We are planting the seeds for our future growth,” Hoffman told WWD. “I want customers to know we believe in certain categories like ladies shoes. Dresses is a real opportunity. It hasn’t been important enough for us. Juniors is a little trickier because there are so many great specialty stores, and ready-to-wear might not be a high growth area but it needs to be a much better performer.”
Shoe departments continue to be expanded and momentum in accessories will be upheld by adding Michael Kors handbags and intensifying Coach, among other changes.
In rtw, Hoffman said Bon-Ton veered too sharply in the first half, to a 70-30 percent balance of updated and traditional-moderate merchandise. The shift failed to capture enough new customers and deterred many existing moderate customers, but fall assortments have been recalibrated to a 50-50 balance. “We are in a clean position going into fall,” Hoffman said. “Our inventories are much more aligned with the customer base.”
The net loss for the quarter ended July 28 totaled $45 million, or $2.43 a diluted share, compared with a loss of $32.3 million, or $1.78, in the year-ago quarter. The results included a pretax charge of $6.3 million, or 34 cents a diluted share, for fees from the recent debt exchange of $330 million in senior notes due 2014 for new notes due 2017, and a pretax charge of $4 million, or 21 cents, for severance and one-time costs from selling Rochester, N.Y., locations and a prepayment penalty for paying off related mortgage debt. Comparable-store sales increased 0.1 percent; total sales slipped 0.1 percent to $594.9 million from $595.5 million.
Hoffman, in a conference call, said it’s been a “tough environment overall for ready-to-wear,” which was exacerbated by Bon-Ton’s own missteps. “It is still a delicate area. We are really going after key items we know have been proven winners in the past. Shoes, cosmetics and home will really be the growth drivers as we get ready-to-wear stabilized.” Home, shoes and cosmetics were the strongest categories last quarter; dresses and juniors were the toughest.
E-commerce is seen accounting for about 3 percent of the $3 billion Bon-Ton’s total sales this year. “Online needs to be 10 percent of the company’s business at the very least,” Hoffman said. “We are making major navigational changes on our Web site,” including adding search filters, brand landing pages, aggressive e-mailing and examining mobile options like texting coupons.
Also, Bon-Ton is shifting to fewer, lengthier promotions and more frequent coupons, in an apparent response to J.C. Penney Co. Inc.’s decision to eliminate coupons and go with everyday low pricing and clearances every other Friday.