The departmental store chain,
Bon-Ton Stores Inc.
) recently reported net loss of 55 cents in the third quarter of
2012, significantly better than the Zacks Consensus Estimate of a
loss of $1.13 and the year-ago net loss of $1.21.
Total revenue nudged up 1.9% year over year to $668.7 million in
the reported quarter, benefiting from same-store sales growth of
1.9% on the back of balanced merchandise assortment, new product
offerings and enhancement of the marketing program. The positive
comps were also driven by stronger performance of the
ready-to-wear category, which was earlier a weak performing
category. E-commerce business also continues to remain robust.
Gross margin in the quarter contracted 80 basis points (bps) to
36.6%, attributable to higher net markdowns rates and delivery
Selling, general and administrative expenses, as a percentage of
revenue, fell 220 bps year over year to 33.6%. Operating income
increased to $10.8 million as compared to $0.5 million in the
Bon-Ton ended the quarter with cash and cash equivalents of $8.1
million, shareholders' equity of $40.3 million and long-term debt
of $957.6 million.
At the end of the third quarter, the company's excess borrowing
capacity under the revolving credit facility was $400 million.
Bon-Ton, headquartered in York, Pennsylvania and Milwaukee,
Wisconsin, reiterated its outlook for 2012. The company expects
earnings in the range of loss of $1.35 per share to a profit 20
cents per share and its adjusted EBITDA guidance between $160
million and $190 million.
Management expects the momentum of the third quarter of 2012 to
continue in the fourth quarter as well, based on strong
merchandising and marketing initiatives. The company has headed
into the holiday season on a great note and expects shoes,
fashion apparel, outerwear, accessories, and home to be key
growth drivers. Moreover, Superstorm Sandy had minimal impact on
its business. Hence, we expect an upward movement in estimates
going forward. The Zacks Consensus Estimate is currently pegged
at a loss of 53 cents for 2012 and earnings of $1.11 for 2013.
Bon-Ton, which competes with the likes of
), carries a Zacks #1 Rank, implying a short-term 'Strong Buy'
rating. Our long-term recommendation on the stock remains
BON-TON STORES (BONT): Free Stock Analysis
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