Bon-Ton reports 4Q, yearend results
March 10, 2010-- Home Textiles Today,
York, Pa. – Soft home was singled out as among the best performing categories in an otherwise lackluster fourth quarter for The Bon-Ton Stores, Inc.
“Our best sales results for the quarter were accessories, moderate missy sportswear, soft home, shoes and children’s,” said Tony Buccina, vice chairman and president – merchandising, during the retailer’s earnings conference call this morning. “The toughest areas were hard home, furniture, ladies outerwear and better missy sportswear.”
For the fourth quarter of fiscal 2009, total sales decreased 2.8% to $1,002.1 million, compared with $1,031.4 million for the prior year period, and comparable store sales decreased 2.4%. The gross margin rate for the fourth quarter was 38.2% of net sales, an increase of 350 basis points compared to last year.
Net income totaled $80.3 million, or $4.34 per diluted share, for the 13-week period compared with a net loss of $87.7 million, or $5.22 per diluted share, in the same period the prior year. The company recorded a non-cash impairment charge of $5.4 million related to long-lived and intangible assets and a favorable tax carry-back of $6.3 million in the fourth quarter of fiscal 2009. In the fourth quarter of fiscal 2008, Bon-Ton recorded charges of $25.9 million to reduce the reported value of long-lived and intangible assets and $108.5 million to provide a deferred tax asset valuation allowance.
For the fiscal 2009, total sales decreased 5.4% to $2,959.8 million compared with $3,130.0 million for the prior year period, and comparable store sales decreased 5.4%. Gross margin rate improved 210 basis points to 37.1%, compared with 35.0% in fiscal 2008.
Net loss totaled $4.1 million, or $0.24 per diluted share, for the year compared with a net loss of $169.9 million, or $10.12 per diluted share, in fiscal 2008. The company recorded a non-cash impairment charge of $5.9 million related to long-lived and intangible assets and a favorable tax carry-back of $6.3 million in fiscal 2009.
"We recognized early on the challenges we were going to face in 2009. Initiatives were identified and implemented throughout 2008 and 2009 to improve our cost structure and better position the company for the weakened economy as well as for the longer term,” said Bud Bergren, president and ceo. “We managed our inventory conservatively…we controlled expenses, reducing our selling, general and administrative expenses by approximately $70 million on a year-over-year basis. We believe that as a result of these actions our organization is more appropriately structured for the environment and we have emerged a stronger company at the end of the year than we were at the beginning.”
Keith Plowman, evp and cfo, made note that Bon-Ton’s January excess borrowing capacity under its revolving credit facility was approximately $358 million, “well above the required minimum availability. The increase in excess borrowing capacity over the prior year balance of $269 million reflects improved operating performance, stringent expense control, prudent capital expenditures, well-managed inventories and the impact of the amended and new credit facilities entered into in 2009.”
He added there was a further increase in excess borrowing capacity through February month-end to $393 million.
“We believe 2009 was a time for strong controls and, as we transition into 2010, we will maintain these controls and balance them with initiatives for future growth and profitable opportunities,” Plowman said.
Bon-Ton’s full year 2010 guidance calls for comparable store sales to be flat to increase by 2%, a gross margin rate of 37.1%, reduction of $20 million to $25 million in SG&A expense, effective tax rate of 0%, capital expenditures not to exceed $50 million, net of external contributions; and estimated 18.5 million to 19.0 million average shares outstanding.
“We will continue to move forward conservatively in fiscal 2010, but we believe our initiatives will provide for growth opportunities and continued earnings improvement in the future."