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In downturn, Bon-Ton banks on furniture  

York, Pa. – Bon-Ton Stores is banking on its furniture business, which has been a bright spot for the regional department store operator since last year through its third quarter, the company said during its quarterly earnings call today.

Furniture was singled out as one of the 280-unit retailer’s best performing businesses for the quarter, along with other hard home goods, missy sportswear, cosmetics and children’s products. Overall results, however, were gloomy.

Bon-Ton reported a net quarterly loss of $19.4 million, half again as bad as its $10.9 million loss for the same period last year. Year-to-date, the net loss has widened to $63.6 million from $41.5 million in the first 39 weeks of fiscal 2006.

Third-quarter sales fell 2.9% to $780.0 million, while same store sales fell 3.0%.

Gross margins were punished in the quarter, down 180 basis points to 34.8% of sales. For the first three quarters the rate is 35.4%, down 80 basis points from 36.2% in the year-ago period.

“Furniture has been a focused business, and it’s actually been a real good business for us in the past,” said Bud Bergren, president and ceo. “We see a good opportunity in furniture.”

He noted Bon-Ton’s furniture business is “significantly higher in sales and gross margin per square foot than the rest of the company in total.” The company’s existing 10 furniture galleries, which the chain plans to expand by about two new units per year going forward, generate more than $300 per square foot in average sales per store, Bergren said.

In the mainline stores too, with furniture under the category umbrella of home, Bon-Ton sees overall gains ahead, with the department among those poised for a higher average retail ticket, said Anthony Buccina, vice chairman, president of merchandising.

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