The Bon-Ton Stores Inc. widened its first-quarter loss, impacted by the backdrop of retail headwinds and given current trend lowered guidance for fiscal 2016.
For the three months ended April 30, the net loss was $37.8 million, or $1.91 a diluted share, from a net loss of $34.1 million, or $1.74, a year ago. Net sales slipped 3.3 percent to $591 million from $610.9 million, while comparable-store sales declined by 2.9 percent. The company said sales increases were in home, young men’s, big and tall, and young contemporary. Women’s accessories was the poorest performing category, while sales in general were impacted by weakness in apparel and shoes.
Kathryn Bufano, president and chief executive officer, said, “Ongoing headwinds in the retail environment, unfavorable weather and a soft Easter all pressured our top-line performance during the quarter.”
She said the retailer “saw only a slight decrease in merchandise margin and reduced inventory levels by 4 percent on a comparable store basis despite the sales pressure, as we maintained disciplined inventory management.”
Bufano added that the company continues to move forward with its cost-savings initiatives, while continuing to carefully manage expenses. She also said that because of first-quarter performance, and current trends in the second quarter-to-date, “we believe that it is prudent to reduce our full-year guidance.”
The company said for fiscal 2016, it now expects a loss per diluted share at 95 cents to $1.45, with comps between flat to a decrease of 1 percent.
On the conference call to Wall Street analysts, Bufano said, “We saw strong performance in our omnichannel business and made further progress enhancing our brand positioning and evolving our merchandise offering. Omnichannel remained a strong performer in the first quarter with sales up roughly 20 percent and mobile sales up in the triple digits.”
She said there was strength with new brands and rollouts, such as the expansion of Under Armour into 150 doors in spring and the introduction of Tommy Hilfiger Ladies in 45 doors. Bufano noted that “updated and contemporary brand performance outpaced classic and traditional,” a continuation from fall 2015 results.
Looking to the back half, Bufano said the company would continue to roll out new brands and enhance its merchandise assortments. Further, she said the firm’s “localization strategy remains a key component of this initiative as we believe the access is a key differentiator for our nameplate guided by our tag line, ‘Your Store, Your Style.’”
Localized content grew to 13 percent of sales in the first quarter, and the retailer sees an opportunity to reach 20 percent over the long-term, the ceo said. She noted that the company would continue to focus on developing its private brands. As for omnichannel, Bufano said there are a number of upgrades for Bon-Ton’s mobile interface that are under way, which will also provide a more mobile friendly access to the firm’s Your Rewards loyalty program. Also being added is a streamlining of the checkout process via mobile, and barcode scanner functionality will enable customers to gain access to additional product information while shopping our stores, the ceo said. Finally, what’s still to come in the third quarter is its buy online, pick-up in store functionality. “We see this as the great opportunity to drive traffic into our retail stores as well as capture incremental sales,” Bufano said.