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Bon-Ton Boosts Private Label Lines

Cecile Corral, Don Hogsett -- Home Textiles Today, March 24, 2008

York, Pa.— Happy with last fall's debut of its private label soft home brand Ruff Hewn, department store operator The Bon-Ton Stores will roll out the program to more of its increasingly popular “Northern Lodge” casual-outdoor lifestyle stores.

Based on its initial success, Ruff Hewn — comprised of top-of-bed ensembles and curtains — is an aspect of home that will be expanded in the coming months, the 279-unit retailer said during its full-year earnings call.

The Laura Ashley and Karen Neuberger lines in soft home are also poised for enhancement, the company said.

“Ruff Hewn continues to perform extremely well as it becomes a more important part of our Northern Lodge strategy,” said Anthony Buccina, vice chairman and president, merchandising, private brand, planning & allocation and internet marketing.

“Ruff Hewn Home [has] preformed above our expectations,” Buccina continued. “We are adding approximately 19 more stores to bring our total to 125 stores with this Northern Lodge assortment.”

While domestics was not noted as one of the retailer's best performers during the fourth quarter or 2007, home was one of the areas of “biggest growth” among the many departments that experienced higher average price points during the period. Overall, Bon-Ton legacy stores saw a 3.6% increase year-over-year in average selling price during the fourth quarter in categories like home and shoes.

Last year proved a challenging one for Bon-Ton; beyond the macro-economic issues, the company was in the second year of digesting its purchase of the Carson's chains. Fiscal 2007 results were undercut by such items as “an asset impairment charge of $4.1 million on a pre-tax basis.”

Bon-Ton reported full year net income of $11.6 million, down 75.2% from $46.9 million in the prior year. Sales of $3.36 billion were essentially flat. Comps fell 6.5%.

Fourth-quarter income of $75.2 million was down 14.9% from $88.4 million one year ago. Quarterly sales of $1.14 billion fell 8.9% from $1.25 billion last year. Comps were down 3.6%.

But president and ceo Bud Bergren said Bon-Ton “accomplished the goals we established for the second year of our integration plan.”

Among the highlights, Bon-Ton: anniversaried its common assortment in all stores along with its marketing and promotional calendar; increased the level of private brand penetration companywide; improved its store-by-store assortments as its planning and allocation divisions “begin to fine-tune the offerings,” he said; and the company “successfully” launched its new e-commerce site in October, to be updated in 2008 with more product offerings and features.

Additionally, Bon-Ton opened two new furniture galleries, and “reconfigured, remodeled and expanded” three existing units and opened a new Parisian store in the Detroit metro area.

Bon-Ton finds itself “fully integrated” and 2008 stands to be its “first fiscal year as one company,” Bergren said.

When asked by a financial analyst to comment on Bon-Ton's competition, Bergren said he hasn't noticed any more promotional activity than normal from its two biggest competitors — Kohl's and JCPenney. He did, however, note Macy's as being “promotional and we still see them promotional.”

Bergren continued, “We think a regional [retailer] in a regional area is the way to go. And when you are running a Midwest region out of New York City, it's to our advantage.”

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