Bon-Ton Stores Inc
) reported adjusted loss of $2.18 in the first quarter of 2012,
well below the Zacks Consensus Estimate of break-even. The
lower-than-expected results were due to sluggish sales and margin
On a reported basis, including gain from sale of property and
severance cost, the company posted a loss of $2.23 per share, much
wider than the loss of $2.01 per share in the year-ago quarter.
Total revenue of the departmental store chain fell 1.3% year
over year to $640.8 million in the reported quarter, attributable
to a 1.3% drop in the same-store sales. The comps suffered due to
weak performance of categories like moderate traditional ladies
sportswear, ladies outerwear and juniors.
Gross margin in the quarter contracted 120 basis points (bps) to
34.3%, attributed to increased net markdowns rate. EBITDA of the
company also plunged $18.3 million to $4.8 million in the reported
Selling, general and administrative expenses, as a percentage of
revenue, jumped 140 bps to 35.6% in the quarter, attributed to
higher store, marketing, insurance and severance costs, partially
offset by the profit from the sale of certain property.
Bon-Ton ended the quarter with cash and cash equivalents of
$14.3 million, shareholders' equity of $91.8 million and long-term
debt of $872.7 million.
Bon-Ton, headquartered in York, Pennsylvania and Milwaukee,
Wisconsin, trimmed its outlook for 2012. The company expects
earnings in the range of loss of 95 cents per share to a profit 50
cents per share, down from its prior outlook of a profit of 15
cents to 75 cents per share and EBITDA is expected between $160
million and $190 million, below the previous guidance of $180
million-$200 million. Comparable store sales are estimated to be in
the range of negative 1.5% to positive 1.0%, lower than the earlier
estimate of positive 1% to 2%.
The company reported disappointing results and also reduced its
outlook. Hence, we expect a downward movement in estimates over the
coming days. The Zacks Consensus Estimate is currently pegged at 13
cents for 2012 and a loss of 15 cents for 2013.
However, Bon-Ton is taking host of initiatives like shifting to
profitable mix, increased focus on smaller market, cost saving
efforts, expansion of updated merchandise and enhancement of
marketing program to drive performance of the company.
Bon-Ton, which competes with companies like
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We also maintain our long-term Neutral
recommendation on the stock.
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