The Bon-Ton Stores Inc., citing top-line sales pressure and a sharp traffic slowdown in April, said its loss in the first quarter widened to $34.1 million, or $1.74 a diluted share, compared with a net loss of $31.5 million, or $1.63, in the first quarter of fiscal 2014.

The regional department store operator said adjusted earnings before interest, taxes, depreciation and amortization was $4.1 million in the first quarter ended May 2, compared with $7.1 million in the year-ago quarter. As of midday, Bon-Ton’s stock price dropped 4.7 percent or 31 cents to $6.30 on the Nasdaq.

“While we saw top-line pressure in the first quarter, we delivered a comparable-store sales increase of 0.8 percent, with growth in both brick and mortar and e-commerce channels, and effectively managed our expenses, leveraging expense decreases to an 80-basis-point reduction in our selling, general and administrative rate,” said Kathryn Bufano, president and chief executive officer of the 270-unit regional department store chain.

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Bufano cited strength in moderate sportswear, active wear and men’s furnishings, and said localization strategies continued to generate good results.  Aside from difficult traffic trends, inclement weather and disruption in merchandise receipts from the West Coast port slowdown were also cited, but Bufano said the company ended the quarter in a healthy inventory position, in terms of freshness and content. Wal-Mart and Macy’s, among other major retailers, have also posted disappointing first-quarter results, citing the same headwinds.

Total sales inched up 0.6 percent to $610.9 million, compared with $607.5 million in the year-ago quarter. Small and midtier stores outpaced larger locations, largely due to an intensification of marketing smaller stores and beefing up their assortments of private brands and more localized assortments.

Although not as robust as in prior periods, e-commerce still showed double-digit growth, primarily due to a higher conversion rate. A new e-commerce fulfillment center opening this fall in West Jefferson, Ohio, replacing five existing centers, should lead to further improvements in results.

“Overall, we believe that the strategies we have in place will yield improved results as we move through fiscal 2015,” Bufano said.

The retailer reaffirmed its earnings guidance for full-year fiscal 2015. Comparable-store sales are seen at 2 percent to 2.5 percent ahead; adjusted EBITDA is projected in a range of $150 million to $160 million, and earnings per diluted share are seen landing within a range of a loss of 25 cents to earnings of 25 cents.

In her conference call with retail analysts, Bufano outlined several key strategies for generating improved results going forward, among them:

* Growing e-commerce to 10 percent of total sales over the next few years, from the 7 percent seen this year.

* Building up assortments of Chaps, Polo Ralph Lauren, Michael Kors, Vera Bradley, Under Armour, Robert Rodriguez, Nine West and Kate Spade.

* Increasing private-brand penetration of revenues to 25 percent within five years, from last year’s 16.6 percent.

* Achieving a 40 percent gross-margin rate in five years, with private brands 200 basis points above that.

* Continuing to reduce aged and clearance merchandise.

* Reducing discount days in cosmetics and adding more open-sell environments.

Bon-Ton, based in York, Pa., and Milwaukee, Wisc., operates stores in 26 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates. Bufano has previously stated that having regional nameplates is a competitive advantage because consumers are loyal to their homegrown stores, and that there are no plans to consolidate the divisions to one name.

 

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