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Sales Fall, Margin Rises In The Bon-Ton Q2 Results

The Bon-Ton Stores, Inc. posted a comparable store sales decrease of 6.4% for its second quarter of fiscal 2013 ended August 3, 2013. Gross margin rate increased 100 basis points to 37.0% compared with 36.0% in the second quarter of fiscal 2012. Operating loss improved by $2.2 million to $15.5 million, compared with an operating loss of $17.6 million in the second quarter of fiscal 2012 and the company posted adjusted EBITDA increased $1.6 million to $8.7 million, compared with $7.1 million in the second quarter of fiscal 2012.

Brendan Hoffman, president and CEO, said, “We were disappointed in our second quarter sales performance, but we were pleased we were able to deliver on several of our goals, including a 100 basis point increase in the gross margin rate and reduced expenses, which led to 23% growth in Adjusted EBITDA. We believe overall sales weakness was in part attributable to the adverse impact of inclement weather in our markets and higher gas prices, especially in the Northeast and Midwest, which contributed to an unfavorable shift in consumer spending patterns. Looking ahead, we remain focused on the continued execution of our key merchandising, marketing and eCommerce strategies, including the localization of our merchandise assortments and marketing programs to drive top-line growth, while maintaining disciplined inventory management and careful cost controls.”

Keith Plowman, evp and CFO, added, “We are revising our fiscal 2013 guidance for Adjusted EBITDA in a range of $170 million to $190 million, for earnings per diluted share in a range of $0.15 to $0.75 and for cash flow in a range of $10 million to $30 million. Assumptions reflected in our full-year guidance are:

  • Comparable store sales in a range of a negative 2.5% to flat;
  • Gross margin rate in a range of 36.0% to 36.2%;
  • SG&A expense, including increased performance incentives, flat to down two-tenths as a percent of sales compared with fiscal 2012;
  • Capital expenditures not to exceed $70 million, net of external contributions; and
  • Estimated 20.5 million average diluted shares outstanding.

“Our excess borrowing capacity under our revolving credit facility was approximately $376 million at the end of the second quarter of fiscal 2013,” Plowman added.