Outside a Bon-Ton location.

Bon-Ton Stores Inc., continuing to battle weak sales and traffic trends, reported a slighter higher net loss in the second quarter to $39.6 million, or $2.01 a diluted share, compared with net loss of $36.2 million, or $1.86, in the year-ago quarter.

The regional department store operator reported that comparable-store sales decreased 1.3 percent, though improvements in inventory management led to a gross margin rate increase of 24 basis points to 36.8 percent of net sales. Total sales in the period slipped 1.4 percent to $555.4 million, compared with $563.5 million in the second quarter of 2014. Sales in small and mid-tier stores continue to outpace larger locations.

Bon-Ton in the last quarter managed to cut selling, general and administrative expenses by $600,000.

The company said the earnings included a $700,000 gain due to an insurance settlement for a fire in a store last year, and a loss of $4.9 million through early termination of a mortgage facility. Excluding these factors, the net loss in the second quarter came to $35.4 million, or $1.80 a share.

“While our second-quarter sales results were challenged, we saw meaningful improvement in our gross margin rate and effectively managed expenses, enabling us to achieve adjusted EBITDA [earnings before interest, tax, depreciation and amortization] in line with that of last year,” said Kathryn Bufano, president and chief executive officer. “Sales were pressured by unseasonably cool weather, which impacted our seasonal classifications, and by weakness in overall traffic trends. That said, we were encouraged by the sales improvement in certain core categories and our private label business. We drove higher merchandise margins while we managed our inventory well, ending the quarter with on-hand inventories flat to last year on a comparable store basis and moving in the right direction to achieve our inventory reduction goal by the end of the year. Additionally, as previously announced, we closed on a sale/leaseback transaction that enabled us to retire one of our mortgage facilities.”

Bufano added, “Some of the macro-pressures that impacted our sales during the second quarter will continue into the second half and therefore, we are reducing our fiscal 2015 adjusted EBITDA guidance to a range of $145 million to $155 million.” Earnings per diluted share are expected to be in a range of a loss of $0.40 to $0.90 on an adjusted basis to reflect the mortgage debt retirement.

Bon-Ton expects comparable store sales to grow 1 to 1.5 percent for the year; gross margins to decrease 10 to 30 basis points from the fiscal 2014 rate of 35.7 percent, and capital expenditures not to exceed $75 million, net of external contributions.

Earlier this year, Bufano said the company was building assortments of Chaps, Polo Ralph Lauren, Michael Kors, Vera Bradley, Under Armour, Robert Rodriguez, Nine West and Kate Spade; seeking to increase private-brand penetration of revenues to 25 percent within five years, from last year’s 16.6 percent, among other turnaround strategies.

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.

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